Supporters of the Tunisian General Labour Union (UGTT) rally outside its headquarters in Tunis before a nationwide public sector strike in June. AP
The deal involves a five percent annual hike to public sector wages every year until 2025.
The head of the UGTT, Noureddine Taboubi, told reporters after the deal was signed that the first hike would take effect next month.
"The agreement was reached after much hard work," Taboubi said.
The cash-strapped government was initially unfavourable to hikes of this scale.
Tunisia has been hit hard by the coronavirus pandemic and global diplomatic fallout from the war in Ukraine, which has sent the price of key imports -- notably wheat and oil -- soaring.
Inflation surpassed eight percent year-on-year in August.
The government is locked in negotiations with the International Monetary Fund over a $2 billion bailout.
The UGTT organised a general strike on June 16 that saw flights cancelled, public transport grind to a halt and government offices closed.