The agreement foresees 3.7 billion euros ($3.9 billion) in annual savings at VW's namesake brand, a step which involves 23,000 job cuts in Germany alone, another source said.
Labour leaders agreed to the cuts in exchange for a management pledge to create new jobs and make investments in electric cars, mainly in factories in Germany.
At the same time as cutting traditional jobs, the VW brand will create 9,000 new jobs through investments in electric car technology, the source said.
VW managers have agreed to build an electric sports utility vehicle at its main plant in Wolfsburg and a smaller electric vehicle, known as the I.D., in Zwickau, the first source said.
Electric motors will be built in Kassel and VW will start battery cell production in Salzgitter. It will build full battery packs at its plant in Braunschweig, the first source said.