Workers and management at automaker DaimlerChrysler have agreed to major cuts in labour costs after protests by tens of thousands of workers in recent days.
Mr Juergen Hubbert Mercedes chief
Employees accepted a €500 million ($613 million) reduction in annual staff costs and the company guaranteed more than 6,000 jobs at the company's Mercedes brand.
"The agreement sets the course for increased productivity and efficiency and so strengthens the long-term competitiveness of the Mercedes car group," Mercedes chief Mr Juergen Hubbert said.
He said the group will make up production lost during recent weeks. The accord followed 16 hours of talks between management, the company's works council and the IG Metall union, and puts on hold demonstrations in Mercedes plants across the country planned for Friday morning.
The stand-off between the company and workers had triggered intense debate in Germany over the high price of domestic labour at a time when many companies
are outsourcing to low-wage regions to remain competitive.
Last week, more than 60,000 workers took part in a day of marches to protest against management threats to cut 6,000 jobs at Mercedes' Sindelfingen plant if the workers did not agree to company demands.
In an attempt to defuse the situation, the company had said its management board offered to accept lower pay too. IG Metall itself needs to appear to have at least wrestled out important concessions from management if the union wants to stem a steady loss of members and retain considerable influence.