(Rewrites with government reaction, management pay cut, details, shares)
By Sabine Siebold
STUTTGART, Germany, July 23 (Reuters) - Employees at carmaker DaimlerChrysler agreed on Friday to work longer hours and give up perks to secure 6,000 jobs in Germany in a deal that will save 500 million euros ($613 million) a year from 2007.
German Chancellor Gerhard Schroeder greeted DaimlerChrysler's agreement with the IG Metall union as "a victory for common sense" that would strengthen Germany's economic recovery and set a precedent for talks at rival car maker Volkswagen
"I am certain that after DaimlerChrysler the negotiations at Volkswagen over cost cuts and job security will lead to a successful agreement," Schroeder, who is on holiday in Italy, said in a statement.
DaimlerChrysler said the deal, struck after weeks of talks that saw output disrupted during protests by employees, would help luxury unit Mercedes to grow profitably and guarantee production in Germany until 2012.
"The agreement sets the course for increased productivity and efficiency and so strengthens the long-term competitiveness of the Mercedes car group," Mercedes chief Juergen Hubbert said, adding the group would make up production lost.
DaimlerChrysler shares traded 0.75 percent firmer at 36.48 euros by 0807 GMT, slightly outperforming the Dow Jones Stoxx European autos index .
The accord followed 16 hours of talks between management, the company's works council and IG Metall, and heads off the threat of further demonstrations planned at Mercedes plants across the country for Friday.
MANAGERS
Over 60,000 employees took part in nationwide protests last week, incensed that they were being asked to make sacrifices while senior DaimlerChrysler management appeared untouched by the group's problems at Chrysler in the United States and its Japanese partner, Mitsubishi .
In a conciliatory gesture, DaimlerChrysler's management board agreed to take a cut of 10 percent in overall remuneration, while 3,000 managers in Germany will also have their packages reduced as part of the cost-cutting programme.
The dispute centred on DaimlerChrysler's home state of Baden-Wuerttemberg, where workers enjoyed better terms and conditions than at other plants in Germany.
Mercedes had threatened to move production of the new version of its C-class saloon from Sindelfingen, near the group's Stuttgart headquarters, to works at Bremen in northern Germany and East London in South Africa, threatening 6,000 jobs.
The deal includes a 50 percent cut in hourly breaks enjoyed by workers in Baden-Wuerttemberg and the implementation of a 40-hour working week in all development and planning departments.
It will also see the introduction of a single pay structure for production and office staff and greater flexibility in adjusting employment levels by assigning young skilled workers and temporary workers to an internal employment agency.
The carmaker's productivity plan follows a similar move by manufacturing and technology giant Siemens AG , which recently won employee agreement to increase working hours at two German works without extra pay.
(Additional reporting by Moritz Doebler in Berlin)