The city reached a contract deal with approximately 7,000 employees of daycare centers late yesterday, ending a four-year deadlock that will give the low-paid employees their first raise since April 2000.

The agreement, which still needs to be ratified by the unions involved, gives most of the teachers, custodial workers, cooks, caseworkers, assistants, and other employees at 346 day-care centers throughout the city a raise of 12% this month, a 2% bump in April, and a onetime $1,000 lump-sum payment.

In exchange, the unions gave up their demand for retroactive raises for the past four years; agreed to an 11% reduction in starting salaries for new employees, and accepted scaled-back benefits, such as a three-day decrease in paid sick leave.

“It’s been a long, long struggle to get this contract,” the director of one of the unions, District Council 1707, Raglan George, said during a news conference in City Hall. “I can’t wait to see the faces of our members when we tell them what we were able to accomplish today.”

The concession on the retroactive raises – which amount to $20 million dating back to 2001 – is what broke the deadlock, Mr. George said, noting that the unions were now lobbying state lawmakers to provide that.

Mayor Bloomberg said the “chief feature” of the contract, which covers the period between January 2001 and March 2006, was that the raises were based on productivity savings. That, he said, was hallmark of all of the city’s contract negotiations.

“If you take a look at 1707, they are hard working people who perform an invaluable function and who don’t make a lot of money,” Mr. Bloomberg said. “It is not easy in this city to make ends meet for an awful lot of people, but particularly for this group.”

The day-care centers’ employees are not technically municipal workers. Because they work for agencies that have contracts with the city, however, the administration often handles negotiations.

Their pay is generally between $24,000 and $34,000 a year, far less than public-school teachers and many of those who do similar jobs in other industries.

The speaker of the City Council, Gifford Miller, who is hoping to unseat Mr. Bloomberg, blasted the administration yesterday for failing to act sooner.

“It could have and should have happened years ago, and it is unconscionable that our city’s 7,000 day-care workers had to go without a contract for nearly five years,” he said in a statement.

The deal comes less than a week after the city settled with drivers for two private bus companies that were striking in Brooklyn and Queens, leaving thousands of commuters in the lurch. It is a sign that the mayor may be chipping away at some labor settlements.

Still, Mr. Bloomberg, since taking office more than three years ago, has been dogged by breakdowns in negotiations with the unions for firefighters, police officers, and teachers. Those workers have yet to settle with the city but cannot legally strike, and their contract talks are likely to be key wedge issues in this year’s mayoral campaign.