Chief government negotiator Andrej Vizjak said the government and the union had reached a "good" deal for all the parties involved.

The agreement provides police officers with additional bonuses for higher workloads and overtime, while a new collective bargaining agreement will address the specifics of their work, Vizjak explained. The agreement is expected to cost the budget an additional EUR 2m this year and about EUR 4.5m in 2013.

Vizjak stressed the government wanted the agreement to create trust between the government and the police unions. "This was key, as it is the only way to future cooperation," Vizjak said.

But Zoran Petrovič of the Trade Union of Police Officers stressed that the agreement "is only as good as it will turn out to be in practice". He said mistrust between the social partners was something that had been "hanging in the air".

Police Commissioner Janko Goršek meanwhile said he was happy that "sober judgement prevailed" among the unions while he also welcomed the new benefits for police officers.

"Slovenian policemen and policewomen definitely deserve better working conditions as well as better payment for their work".

Prime Minister Janez Janša said he was happy that the agreement had been signed as he concluded the government visit to the Pomurje region. This ends the saga on the implementation of the act on the balancing of public finances, which will enter into force on Thursday, he said.

He labelled today's signing "an important step enabling us to build further". "If this step had not been made, there would be no foundations to build on. We would have no use of long-term reforms if we wouldn't survive in the short term or we would be forced to take measures that would push Slovenia back in terms of development."

Today's agreement also gives Janša more optimism for the on-going negotiations on a new social agreement, as part of which further steps, including structural reforms, will be discussed.

Janša is particularly happy that there "is a great level of national consensus on the steps that are not easy to make". He would also like to see future measures enjoy wide support. "This is why the government invested significantly more time in the social dialogue in the last three months than was invested in ten years," he said.

The signing of the agreement at the National Assembly comes after two weeks of intensive negotiations that ended with a preliminary agreement yesterday afternoon.

The eleventh-hour deal was a result of police unions refusing to sign an agreement on public sector cuts and initiating instead proceedings to call a referendum, which would have effectively blocked the balancing of public finances act from coming into force.