General Motors Corp. and the Canadian Auto Workers union have reached a tentative agreement in negotiations to reduce labor costs as mandated by the Canadian and Ontario governments as a condition of securing government loans.

CAW President Ken Lewenza said the agreement between the United Auto Workers and GM a day earlier put pressure on the Canadian talks, as well as the need for GM to be able to put a comprehensive restructured business plan on President Barack Obama's desk within three days.

A tentative agreement was reached late Thursday night and received the initial approval of representatives of the Canada and Ontario governments.

The union will meet with its leadership Saturday with ratification meetings and votes to be completed Sunday.

The deal staves off threats that failure to reach an agreement would result in the liquidation of GM operations in Canada and maintain the same level of production in the country in return for Canadian government loans.

Lewenza said the union was promised the new contract would be honored by GM in bankruptcy. The automaker is expected to file for protection in both the U.S. and Canada by month's end.

Core wages and benefits were preserved, but the union gave concessions that will see workers and retirees pay for more aspects of health care and lose some benefits similar to the terms already agreed to by unionized Chrysler workers in Canada.

The cuts, combined with high productivity at GM's Canadian plants, bring labor costs to the same level as those at Toyota Motor Corp. facilities in Canada, Lewenza said. It represents a cut of about $20 an hour when all is factored in.

Key to the settlement was restructuring of the pension plan. GM's plan in Canada is underfunded by about $6 billion.

A pension benefit freeze will be in effect until 2015 and new hires will pay $1 an hour to the pension fund.

The union agreed to give up a $3,500 bonus and contribute that amount to a new trust fund established to manage retiree health care.

Lewenza said GM has made a commitment to return its plan to solvency and no longer take advantage of a Canadian loophole that designated the automaker as too big to fail and thus allowed it to contribute proportionately less than smaller automakers such as Chrysler LLC and Ford Motor Co.

GM is working with the Ontario government to resolve the amounts and payment schedule to restore the fund to adequate levels. Once GM receives government funding, some of that will be used to bolster the fund.

With the recent closing of the Oshawa, Ontario, truck plant and other Canadian plants still to close including a transmission plant in Windsor, about 3,000 retirees will join the roughly 25,000 GM retirees or a ratio of four retirees for each active employee.

"GM Canada extends its sincere appreciation to the CAW leadership for its forthright commitment and determination in reaching today's tentative agreement which was required to meet competitive cost benchmarks and the expectations of the Ontario and Federal governments for significant further reductions in the company's longer term liabilities," the company said in a statement.