A potential strike at six Volkswagen factories in Germany over a wage dispute has been averted after a deal was struck between management and the unions.

A potential strike at six Volkswagen factories in Germany over a wage dispute has been averted after a deal was struck between management and the unions.

"A compromise has been found," one union leader said. "Both sides emerged as winners."

A report stated that the strike had initially been called over a labour dispute, but the resolution agreement included job guarantees until 2011. The unions in turn accepted a 28-month pay freeze and a one-off payment.

Under terms of the agreement, workers will receive a one-off payment of nearly R8 000 in March. In return, their pay will be frozen until January 2007, and they have been guaranteed job security until 2011.

VW had sought a two-year pay freeze and a 30 per cent cut in labour costs by 2011.