Workers walked out in August over proposed privatisation plans, which are part of wider free-market reforms from President Patrice Talon’s government to kick-start the country’s slowing economy.
The walkout is said to have been responsible for the deaths of a number of patients and led to mounting public anger.
But a government source said an agreement was signed late Friday and that nearly 2.5 billion CFA (3.7 million euros) would be made available towards improving salaries and conditions.
Benin’s economy is largely dependent on trade with its larger neighbour to the east, Nigeria, which has itself not long emerged from a months-long recession.
Talon’s plans for recovery — at a time of rising costs of living and tax — have seen a wave of industrial action in recent months, including the court and education sectors.
One union leader said the government had agreed to postpone the creation of a working group to look into the implementation of the privatisation plan.
Development minister Abdoulaye Bio Tchane, who led the negotiations, said: “The government showed its willingness to meet the demands of the health sector unions and to end the strike in this very crucial sector.”
The government gave “its agreement in principle to resolve, in the shortest time possible, concerns about workers’ jobs in the sector”, he added.
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