It helped support the democratization process when it was in danger of collapsing, the Norwegian Nobel committee said in its citation.
"This is a great joy and pride for Tunisia, but also a hope for the Arab World," UGTT chief Hussein Abassi told Reuters.
"It`s a message that dialogue can lead us on the right path. This prize is a message for our region to put down arms and sit and talk at the negotiation table."
With a new constitution, free elections and a compromise politics between Islamist and secular leaders, Tunisia has been held up as a model of how to make the transition to a democracy from dictatorship.
"This a brilliant example, I think Tunisia is one of the Arab countries that has done best since the so-called Arab Spring and the upheavals in that part of the world," said Ahmad Fawzi, chief U.N. spokesman in Geneva.
The Nobel Peace Prize, worth 8 million Swedish crowns ($972,000), will be presented in Oslo on Dec. 10.
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