Unionized subway workers called off plans to go on strike Tuesday after reaching a last-minute agreement with the transit system operators on retirement age and the severance pay system.

The 8,118-member union member of Seoul Metro, a public corporation that runs Seoul subway lines one through four, were scheduled to walk later in the day after repeatedly failing to find middle ground on various outstanding issues despite mediation from the National Labor Relations Commission.

The two sides had engaged in last-minute negotiations from 10 p.m. Monday and were finally able to reach an agreement that averted the walkout, which would have disrupted mass transportation in the capital city.

Under the agreement, the retirement age of workers will be moved up, while at the same time the current practice of progressively increasing severance pay will be discontinued to reduce outlays.

Unionists claimed that management had not kept its word to move up the retirement age to 61 from the current 58 despite having promised to do so four times in the past. The retirement age was lowered from 61 to 58 in the wake of the 1997-98 Asian financial crisis.

Seoul Metro's management argued that if the retirement age is adjusted, there should be corresponding changes to the severance pay system. The subway operator claimed that if the present severance pay system remained intact, labor costs would go up 130 billion won ($120 million) in the 2014-2018 period.

Besides these agreements, management agreed to increase wages by 3.5 percent this year compared to 2011, and to set up an in-house review board to oversee qualifications for promotion.

Seoul Metro President Kim Ik-hwan said that it is a relief that the two sides were able to agree on a compromise that averted the strike. (Yonhap News)