Germany's largest labor union, IG Metall, and employers on Friday reached a compromise deal on pay rise for engineering industry workers, averting a full-blown strike in Germany's leading export industry.

Under the deal reached after over 20 hours of negotiations, some 800,000 metal and engineering workers in the southern state of Baden-Wuerttemberg will get an immediate pay rise of 4.1 percent, plus a further 1.7-percent pay rise in one year's time.

The agreement also earns workers one-time payments of 400 euros in both April and May.

Analysts said the deal may serve as precedent for as many as 3. 4 million metal, electronics and car workers in Germany and boost the case for higher interest rates at the European Central Bank. IG Metall's pay deals in Baden-Wuerttemberg traditionally set the benchmark for wage talks in Germany's other regions and industries.

IG Metall, which had been seeking a pay rise of 6.5 percent, staged several warning strikes in the past week to press its case, saying that workers should also benefit from Germany's steady economic growth recently.

Employers had offered only a 2.5 percent rise, saying that a dramatic pay increase would undermine Germany's competitiveness in machine building on the world market.

Source: Xinhua