Under the agreement, steelworkers in northwestern Germany would receive a pay raise of 2.3 percent starting in July and another 1.7 percent in May 2015, the German metalworkers union IG Metall announced Tuesday.

The deal was reached after 12 hours of talks on Monday night and will last for 17 months, IG Metall said in a statement. Originally, IG Metall had sought 5 percent with a contract lasting 12 months.

In support of their demands, IG Metall called warning strikes last week at German plants operated by steel companies ThyssenKrupp, Salzgitter, ArcelorMittal and Finland's Outokumpu.

The wage increase hits German steelmakers at a time when the industry is struggling in Europe, suffering from overcapacity and tight global markets.

"It is a compromise at the upper limit of what we can cope with," said Helmut Koch, negotiator for the employers.

IG Metall said, however, that demand for steel was recovering and should bolster the steel sector in the coming months.

Knut Giesler, head of IG Metall in the German state of North Rhine-Westphalia, said steelworkers had achieved the pay hike they had sought.

"Our colleagues will be OK with it," he said with a view to a scheduled vote among trade union members.

The wage deal also includes provisions for older workers to be allowed to work part-time and for employers to offer apprentices permanent jobs until January 2018.

uhe/cjc (AFP, Reuters, dpa)