MEXICO CITY (Reuters) -- Workers at the Mexico unit of Volkswagen AG agreed on Sunday to a salary increase of 5.25 percent and avoided a Monday strike, days after accepting a shorter work week to save 2,000 jobs.
The 9,800 unionized workers had planned to strike on Monday if an agreement were not reached.
"The proposal accepted by the members is for a 5.25 percent (increase) directly in salary," said union chief Jose Luis Rodriguez, adding the increase will also apply to some benefits.
The union had sought a salary increase of 13.6 percent.
Volkswagen's plant in central Puebla state saw production drop 11.2 percent from January to July amid lower demand for export models, due largely to the economic slowdown in the United States, Mexico's main trading partner.
In June the company said it would reduce production by 23 percent, meaning 2,000 layoffs. But workers last week agreed to a four-day work week including pay reductions to save the jobs.