DaimlerChrysler and worker representatives struck a deal Friday morning to save jobs and cut expenditures at the Mercedes-Benz division in Germany.

According to the deal, reached after a week of negotiations, no jobs in German factories producing Mercedes-Benz models will be cut until 2012 while workers and managers have to accept reduced salaries.

"After tough and constructive talks, we have reached a good solution for DaimlerChrysler and for Germany," said chief executive officer Juergen Schrempp.

The reduction in salaries will save DaimlerChrysler 500 million euros (613.4 million US dollars) every year and slash the cost of each C-Class Mercedes-Benz sedan by 500 euros (613.4 dollars), he added.

The cost-cutting measures include freezing of pay rise for 160,000 workers, longer working hours for employees at the research and development department and a 10-percent reduction in salaries of top executives.

The management of DaimlerChrysler has threatened to lay off 6,000 workers at the Mercedes-Benz main factory in Sindelfingen and moved the production of C-Class elsewhere if negotiations with workers failed.

Tens of thousands DaimlerChrysler workers across the country went on strike last week, opposing the German-US automaker's cost-cutting plan.

Chancellor Gerhard Schroeder hailed the accord as "good for the future."

It could "contribute to strengthening economic recovery" and might lead to success in similar labor-management talks in other German car companies, Schroeder said.