* Agreement runs for 14 months
* Follows smaller pay rises in past two years
(Updates with quotes, details)
By Tom Kaeckenhoff and Matthias Inverardi
DUESSELDORF, Germany, Sept 30 (Reuters) - German steel unions and the IG Metall labour union agreed on Thursday to a 3.6 percent pay rise from October for 85,000 workers in the sector, averting further strikes.
The unions had asked for a 6 percent rise and staged three days of strikes last week to back their claim.
The deal, which runs for 14 months, will also see steelworkers receive a 150 euros ($204) payment for September.
After a period of muted pay demands reflecting worries about jobs in Germany's sharpest post-war recession, the recovery has emboldened unions to push for increases, and steelworkers are leading the charge. The steel talks were closely followed by other sectors and could serve as a model.
The main companies affected by the deal include ArcelorMittal, Salzgitter, and ThyssenKrupp.
The employers also agreed that contract workers would receive the same hourly wage as permanent staff. About three percent of workers in the steel sector are contract workers.
"It was difficult," said Helmut Koch, who led the talks for employers.
Unions were eager to ensure companies did not increasingly turn to contract workers during the upturn. Skilled steel workers have gross wages of about 2,600 euros per month and contract workers receive about 20 percent less.
"This is a strong signal as far as the treatment of contract workers in Germany is concerned," said Oliver Burkhard, head of IG Metall in the state of North-Rhine Westphalia. "This is the first post-crisis wage round. The crisis is history."
During the past two years the union concentrated on job protection. It accepted a one-off payment of 350 euros for 2009 and a 2 percent pay rise for 2010.
Germany's steel industry has profited from strong industrial activity and a catch-up in the construction sector after a harsh winter, riding a wave of global recovery. (Writing by Erik Kirschbaum; Editing by Mike Nesbit and Dan Lalor) ($1 = 0.7362 euro)