Strike at DaimlerChrysler ends as union agrees to more working hours

German Chancellor Gerhard Schröder has said agreement between DaimlerChrysler management and striking unions is a "victory of sense" that could be a model for other companies and mark a new era in German industrial relations.  Derek Scally reports from Berlin.

A crippling strike at the German car giant came to an end on Friday after 14-hour talks when IG Metall union officials agreed that workers would forgo their next pay rise and work 39 hours a week, four extra hours, without extra pay.

In exchange, management dropped their threat to export production of the Mercedes C Class to South Africa, threatening 6,000 jobs. They also guaranteed jobs until 2012 and agreed to slash the management pay packet of €40 million by 10 per cent.

The company said the deal would save more than €500 million in personnel costs.

The agreement at the company, which employs 140,000, elicited particular praise from employers' organisations, which welcomed IG Metall's "increasingly pragmatic" course.

German politicians and top managers said the agreement should be used as a blueprint in other companies, such as Volkswagen, which faces house agreement talks in September.

"I am certain that, after DaimlerChrysler, the negotiations at Volkswagen over cost cuts and job security in Germany can be brought to a successful conclusion," Mr Schröder said.

Mr Christian Wulff, the conservative state premier in Lower Saxony, where Volkswagen is based, said: "When we are more flexible, creative and prepared to do more work under different conditions, then we have the chance to secure the German production location."

The Volkswagen wage talks are likely to be bitter: the main plant in Wolfsburg is working at 70 per cent capacity and the firm cut a profit forecast last week.

But IG Metall officials have warned Volkswagen and other employers against jumping on the bandwagon after the DaimlerChrysler agreement.

"\ is still making considerable profits. Volkswagen is not a case for rehabilitation," said Mr Jörg Köther, head of IG Metall in Hanover.