Volkswagen will give staff in Germany a 2.3 p.c pay enhance as a part of a brand new labor settlement with the IG Metall union.

The deal covers 120,000 staff at six crops in western Germany. It begins in January and can run for 23 months till November 2022.

“Now we have reached a collective settlement with a way of proportion and motive that does justice to the significantly difficult surroundings because the begin of the pandemic,” VW’s chief negotiator, Arne Meiswinke, stated in a statement on Tuesday.

VW will even give the staff a 1,000-euro ($1,190) coronavirus allowance. They will even obtain 150 euros to strengthen the corporate pension plan.

The settlement applies to staff at crops in Wolfsburg, Brunswick, Hanover, Salzgitter, Emden and Kassel, in addition to at Volkswagen Monetary Companies.

IG Metall had requested for a wage enhance of 4 p.c and final month dismissed VW’s earlier supply of a 1.2 p.c rise.

VW has seen its shares rise by greater than half, shrugging off the influence from the pandemic and a chip scarcity that has hit the automotive sector.

Employers have warned that tons of of 1000’s of jobs could possibly be misplaced in Germany if Europe’s largest economic system can not enhance its competitiveness and have stated there was restricted room for wage will increase.

Reuters contributed to this report