The United Parcel Service (UPS) and the Teamsters' Union agreed early yesterday on a five-year contract, which, if ratified countrywide by the company's 185,000 striking workers, will mark the greatest triumph for US organised labour in 20 years. It was also the biggest strike in 20 years.

"This is a victory for all working people in America," said Mr Ron Carey, president of the Teamsters' Union. "This victory sends a signal that American workers are on the move."

At the end of the 15-day strike, the Teamsters' union appears to have won its main demands. UPS will raise wages for all its workers, full-time and part-time. Some 10,000 of the latter will become full-time workers with pay increases of $4 an hour. The union retains control of its pension fund, which had been a key demand of UPS to control. Mr James Kelly, chairman and chief executive officer of UPS, said: "We firmly believe that this agreement in its present form could have been achieved without a strike."

He warned of lay-offs if business lost in the strike was not restored. "The reality is that the customers aren't all coming back, and we'll have fewer jobs," he said.

Mr Carey responded by saying that the union would work doubly hard to ensure that no customers were lost because of the stoppage. The Teamsters are popular with their customers, to whom they deliver everything from packages to industrial and heavy equipment, as became evident during the strike. "We'll make sure that as UPS grows, so will the jobs," Mr Carey added. Mr Carey went on to say that there would be 10,000 new full-time jobs with higher wages for all. Their pensions have been protected and the safety guarantees reinforced. "It's a turning point for American labour," he declared.

President Clinton, who is on holidays, hailed the end of the strike and praised the efforts of his Labour Secretary, Ms Alexis Herman, who, with a panel of mediators from her department, worked round-the-clock to resolve the dispute. "It's not an outright victory if you characterise it as a defeat for UPS," Mr Clinton said. "It proves that money can be made in this economy."

On leaving the White House on holidays last Sunday, Mr Clinton asked both sides as well as the federal mediators to redouble their efforts to resolve the dispute. Agreement was reached early yesterday on Mr Clinton's 51th birthday. The US Trade Union Federation of Labour and Congress of Industrial Organisations (AFL-CIO) under its president, Mr John Sweeney, contributed heavily to Mr Clinton's re-election campaign last year.

UPS hopes to resume normal operations today.