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The Canadian Auto Workers union agreed Sunday to sweeping concessions with General Motors Corp. (GM), a move that clears the way for the struggling auto maker secure loans from the Canadian government.

The CAW was left with few options after GM warned it might cease operations in Canada without union givebacks. The Canadian government said it wouldn't consider giving state aid until the union agreed to concessions.

The new deal freezes wages for active workers and pension payments for retirees. Workers will get less time off and forgo cost-of-living pay increases. In addition, retirees for the first time will make co-payments for health care.

A majority of GM's 10,000 hourly workers in Canada must ratify the deal. A vote is expected this week.

"There is no joy on our side of the bargaining table," CAW President Ken Lewenza said Sunday at a news conference. "This is the furthest thing we wanted to do, but the alternatives are worse."

The concessions come as GM, subsiding on $13.4 billion in U.S. government loans, negotiates deeper concessions with the United Auto Workers in the U.S.

GM has said it needs at least $6 billion in aid from other governments this year in addition to up to $16.6 billion in additional aid it's requesting from the U.S. Without the cash, the auto maker said it could be forced into bankruptcy as soon as this spring.

The CAW said its deal is contingent on a GM commitment to continue building vehicles in Canada as well as on the auto maker receiving the Canadian loans. Canada's auto industry has lost its competitive edge to U.S. workers represented by United Auto Workers as the UAW has agreed to concessions that have reduced GM's labor cost in the U.S. The weakening U.S. dollar also has lowered the cost of business for GM at home.

"We had to keep pace to make sure there were no reasons to move work from our plants to the United States," Lewenza said. "This will cause real hardships to are members and their families."

GM said in a statement that the labor deal will make its Canadian operations more competitive and help the company execute its global viability plan.

"The agreement marks a positive further step in GM Canada's restructuring plan," the statement said.

-By Sharon Terlep, Dow Jones Newswires; (248) 204-5532; sharon.terlep@dowjones.com