German national rail operator Deutsche Bahn on Tuesday said it agreed to gradually reduce train drivers' working hours in a wage deal struck with union GDL, ending months of dispute and nationwide strikes.

"The dispute was tough, but we have now been able to agree on an intelligent compromise," Deutsche Bahn said in a press release after announcing the agreement late on Monday.

A "working time corridor" will be set up, allowing the train drivers to gradually reduce their working time to 35 hours per week by 2029 while keeping wages at the same level.

Those who wish to continue working a 40-hour week would get a 2.7% hourly wage increase, it added.

As part of the agreement, which runs for 26 months retroactively beginning on Nov. 1, 2023, both sides agreed that there would not be strikes for nearly two years.

Both sides also settled on a 420 euro ($455.66) salary increase in two steps and on a 2,850 euro one-off inflation compensation.

Germany has been hit by a wave of industrial action in recent months, as high inflation and staff bottlenecks soured wage negotiations in the transport sector, affecting national rail, air travel and public transport.

The state-owned rail operator posted a 2.4 billion euros net loss in 2023 as investments in Germany's ailing railway infrastructure hit a record high, but pointed to a return to profitability next year.