Budapest - A nationwide strike by public sector workers in Hungary scheduled for January 12 has been averted after union and government representatives struck a compromise deal at 4 am on Friday following lengthy negotiations.

Twenty unions have signed a deal over "thirteenth month" bonuses, state secretary for employment Gabor Csizmar announced on morning television on Friday.

"On the basis of this agreement, the overwhelming majority of unions have agreed to call off the January 12 strike," said Laszlo Varga, head of the union forum involved in the negotiations.

All Hungarian public sector workers traditionally receive an extra payment equivalent to one full month's pay at the end of the year.

In the new deal, the government has capped the annual bonus at 180,000 forints (975 dollars), to be paid in twelve monthly installments in place of the former lump sum. The cap is higher than the average gross wage of many public sector workers in Hungary.

"This is good news for the country, but also for the employees, as it means that those who do not earn more that 180,000 forints a month will receive a hundred per cent of their current thirteenth month payment," said Csizmar.

Unions had announced a nationwide strike for January 12 after a large demonstration in the capital Budapest last month.

Thousands of public sector workers, from teachers to firemen, protested in front of parliament at the end of November following the government's announcement that the bonuses would be scrapped as part of its latest austerity drive.

Only two workers' groups, including one of Hungary's largest teachers' unions, refused to sign the deal on Friday. (dpa)