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Under pressure to cut costs and improve earnings, the automaker Volkswagen AG struck a far-reaching compromise with its workers Wednesday, winning a 28-month pay freeze and lower pay for new hires in return for a no-layoff guarantee until 2012.

Under the wage deal, pay scales would be frozen through Jan. 31, 2007, with only a one-time payment of 1,000 euros (about $1,270) next year. New hires could start at up to 20 percent lower pay, and the company would cut overtime costs by expanding a plan under which extra hours are banked so workers can work less when demand is slow and still get paid.

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