The Kazakh unit of ArcelorMittal (MT.N: Quote) (ISPA.AS: Quote) reached a deal with its workers to avoid layoffs or shutdowns by introducing three-month pay cuts for employees instead, the company said on Monday.

It said in a statement it had introduced limits on bonuses and other payments, reducing the total payroll by 14 percent following a period of tense and extensive talks with its workers.

I am grateful to all those who participated in the talks for understanding the situation and for their support, the company quoted Chief Executive Frank Pannier as saying.

It also said it would change its bonus system linking the payments to output and profits.

Earlier this month, the company said it would have to halt operations and lay off staff unless measures are taken to cut costs. ArcelorMittal employs about 46,000 people in Kazakhstan and layoffs would have been a concern for the government.

The central Asian state has been hit hard by the global downturn. Its banks are struggling to repay debt and people have become more outspoken in their criticism in a former Soviet country where the government allows little public debate.

ArcelorMittal has announced nearly 1,000 layoffs in the United States, while 1,000 European steel workers clashed with riot police outside its May 12 shareholders' meeting in Luxembourg in a protest over output cuts. [ID:nLC45767]

ArcelorMittal Temirtau, which lost $100 million in the first quarter due to sagging demand, said in January it would cut liquid steel output this year to 3.17 million tonnes from 3.43 million in 2008. (Writing by Maria Golovnina and Olzhas Auyezov; Editing by David Holmes)

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