About 6,000 production workers at Jaguar, the loss-making luxury car firm, have won an inflation-busting two-year deal which will make them the highest paid in the industry.

Jaguar, owned by Ford, is to give its hourly paid workers an extra 4% from November 1 and at least 3% more a year later in a deal that will raise average pay to £414 a week.

The deal, approved by 63% in a secret ballot, gives the company, which has been hit by high marketing and new product costs, a greater degree of flexibility on the production line.

Under a "catch-back" provision, workers will have to work up to an extra hour's overtime the next day if production is interrupted on any one shift. "It's a recognition from our side that obviously there's got to be a degree of flexibility when unforeseen circumstances affect output," said Duncan Simpson, chief negotiator for the Amicus engineering union.

He said Jaguar, which next week relaunches the XJ, above, is imposing a 4- day week at Halewood, near Liverpool, from the end of this month.

The workers will earn between £25 and £28 more a week, with a second-year rise of inflation plus 0.5% or 3%, whichever is higher.