Full-scale strike action in Germany has been avoided as employers and unions representing the metal-working and electrical industries reached a pay deal on Saturday, according to dpa-AFX news agency.

From 1 June pay will be increased by 3%, and workers will receive a one-off payment of EUR310 for the three months March-May 2006. The agreement lasts for 13 months - until April 2007.

The deal has been criticised by the VDA, which says that it will hinder Germany's cost competitiveness.