EFEMexico City

Mexican state-owned oil company Pemex and its union reached agreement on a 3.99 percent salary hike and a 1.75 percent increase in benefits, the former monopoly said in a statement.

After several months of talks aimed at hammering out a new collective-bargaining agreement governing labor relations over the next two years, Pemex CEO Emilio Lozoya and the union's secretary-general, Carlos Romero, signed the accord on Wednesday.

The two sides had agreed in August on a one-month extension of their deadline for reaching a deal.

In Thursday's statement, Pemex did not provide details on the negotiations, considered critical to efforts to reduce the company's 1.5 trillion pesos ($89 billion) in labor liabilities, equal to 8 percent of Mexico's gross domestic product.

The two sides were expected to negotiate more stringent retirement conditions for workers, who currently can retire at age 55 or after 25 years of service.

Lozoya said in the statement that the accord committed both sides to strengthening actions aimed at making Pemex more efficient and competitive and enabling it to meet the challenges of Mexico's recent energy reform.

That overhaul ended Pemex's monopoly and cleared the way for private and foreign companies to develop crude reserves for the first time since 1938.

For his part, Romero said the accord showed employees' willingness to work hand-in-hand with management to face the new scenario within a framework of respect for their rights.

Mexico's government is looking to the 2013 overhaul to attract tens of billions of dollars in investment and reverse a roughly 30 percent decline in the country's oil output, which peaked at 3.38 million barrels per day in 2004 and currently stands at roughly 2.3 million bpd.