Volkswagen has struck a deal with metalworking union IG Metall for the western German factories of the automaker. The deal will closely follow an earlier deal which was struck with the wider metal engineering industry, according to a person familiar with the negotiations. IG Metall is Germany’s largest trade union.

The two-year deal specifies that workers will receive a two-step wage hike totaling 8.5% as well as a 3000 euro lump sum payment after tax. In a statement Wednesday, the union announced that a wage deal had been struck with the carmaker, and that they would be holding a news conference at 0800 GMT in the city of Hanover.

The union had demanded that roughly 125,000 workers at six German Volkswagen plants receive an 8% wage increase, along with subsidies including Financial Services.

Previously, IG Metall had agreed to a below-inflation-level wage hike for 3.9 million metal and electrical sector workers throughout Germany. Experts have pointed to the deal as a hopeful sign wage pressures can be contained within the broader Eurozone.

Under that deal, worker’s wages would increase by 5.2% from June 2023, and then there would be a 3.3% increase from May 2024. In addition, workers would be given a tax-free lump sum payment of 3000 euros in two installments in March of 2023 and in March of 2024.

(1 euro = $1.031)