UPDATE 1-Czech Skoda Auto says agrees wage deal with unions

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PRAGUE, April 18 (Reuters) - Management at Skoda Auto, a unit of Volkswagen AG , has reached a wage deal with unions that will avert a renewed strike at the Czech Republic's biggest company, a Skoda official said on Wednesday.

"You can say Skoda confirms a deal," a company official told Reuters on condition of anonymity. He would not give details.

There have been very few strikes in the Czech Republic in recent years and unions at a number of other firms were watching Skoda to see whether they can also press employers for a larger share of profits in the fast expanding economy.

Skoda had said it was ready to raise base wages by 7.5 percent this year and 3 percent next year. It also offered to raise various benefits for an overall pay increase of about 12 percent over two years.

The unions have demanded more, plus a guarantee that a significant pay rise this year is followed by another in 2008 to match inflation, which has hovered below 2 percent in recent months but is expected to creep higher.

Skoda's management has said that any larger pay hikes would put into question further investments at Skoda, a Communist-era state firm turned into a successful exporter under Volkswagen, which bought it in 1991.

Skoda had sales of 203.7 billion crowns ($9.92 billion) last year and has more than 27,000 employees. It is the country's largest exporter and a key customer for dozens of parts makers.

The average wage for manual workers is 22,000 crowns, 10 percent above the national average but a fraction of wages at Volkswagen's plants in Germany.

A Skoda spokesman said the company would hold a news conference at 4.30 p.m. (1430 GMT). Union officials declined to comment.