The Canadian Auto Workers said Monday it has worked out a three-year master economic agreement with Ford Canada that the union claimed will mean a two-tier wage system won't be introduced.

The master agreement will now go for collective bargaining on local issues, the union said. If a tentative agreement can be worked out, it usually becomes the template for the union's bargaining with the two remaining automakers.CAW president Buzz Hargrove spoke to the media on Monday. (CBC)

Speaking to reporters at a downtown Toronto hotel, CAW president Buzz Hargrove said the three-year agreement, which will run through September 2011, includes no base wage increase.

Under the agreement, new hires at Ford would start off at 70 per cent of current base wages, growing to 100 per cent after three years.

In the United States last year, the United Auto Workers and the Big Three automakers — Ford, General Motors and Chrysler — worked out new collective agreements under which some new hires will be paid at a lower wage scale.

Hargrove said the negotiations were "very intensive...but they paid off."

He said the St. Thomas, Ont., plant will get a one-year reprieve. The plant was due to cease production in 2010. That will now be extended to 2011.

"Our members, I believe, in St. Thomas will be incredibly relieved that they know they're going to be around for the next set of [collective] bargaining," Hargrove said.

The deal also includes a reduction in vacation pay by 40 hours per year, compensated with a special $3,500 cash payment in January 2009.