"The deal sets an average pay rise of 7,5 per cent, representing a real wage hike for workers in the vehicle manufacturing industry," The National Union of Metalworkers of South Africa's (NUMSA) spokesman, Dumisa Ntuli, said in a statement.

NUMSA had threatened to go on strike after failing to reach an agreement on wage increases with the Automobile Manufacturers Employers Association.

The union had demanded a nine per cent across-the-board increase, while employers offered 6,5 per cent.

South Africa's central bank is targeting an inflation rate of between three per cent and six per cent.

South Africa's automakers have won several contracts for the export market and account for 12,8 per cent of the country's total exports.

The unions have traditionally used such multi-billion rand contracts to pressure employers to agree to their demands.

-Nampa-Reuters

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