On Wednesday around 30,000 workers in Germany’s vital manufacturing sector downed tools in a coordinated action that affected over 100 companies, including Daimler and Bosch. The strikes continued on Thursday with an estimated 115,000 workers staging a walk out in around 400 companies, including Porsche and Audi, as part of industrial action to secure a hefty 6.5 percent pay rise forGermany’s 3.6 million metalworkers.

Yet, while some workers in troubled countries may look with envy at their German comrades’ brazenness, in fact the action taking place from Berlin to Bavaria could end up being to the benefit of workers in Madrid, Athens or Lisbon.

After all, the stagnating wages of the past 10 years have served to tip the scales decidedly in German companies’ favor, allowing them to boost their competitiveness at a time when wages were soaring in many other euro zone countries.

That, along with actually producing high-quality goods that the rest of the world wants, has been partly to blame for some of the massive disparities within the euro zone, and to the indebtedness of countries that imported all those German goods.

“This has contributed to the imbalances in Europe, and means that Germany is also partly responsible for the current economic crisis in the euro zone,” argues Alexander Herzog-Stein, an economist with the Macroeconomic Policy Institute, a think-tank with links to Germany’s trade unions.

Now, organized labor in Germany could be riding to their fellow Europeans’ rescue, albeit largely out of self interest.

If wage hikes boost domestic consumption back home, it could go some way to correcting the imbalances that have been a hallmark of the monetary union, as German workers spend their wage increases on more products, including imports from other euro-zone states. As such, decent wages in Germany could even help generate much-needed growth elsewhere.

That could be an alternative to brutally slashing jobs and wages in troubled euro-zone countries.

What is certain is that unions here are adamant that wages have not risen fast enough, given Germany’s position as Europe’s industrial powerhouse.

Even in the engineering sector, vital to its export-led economy, wages have stagnated.

Leaders of the metalworkers union, IG Metall say the current employers’ offer of 3 percent is a “farce” and “provocation” and are hoping their action gets them their 6.5 percent. They are also demanding that employers hire apprentices at the end of their training, and that worker representatives have more say over the employment of temporary workers.

Joerg Hoffmann, regional union leader for the wealthy state of Baden-Württemberg, home to Porsche, said that a deal had to be reached by 15 May. “Otherwise we’ll show them the red card.”

The workers in the engineering sector are hoping to emulate other recent successes. Service union Ver.di secured a 6.3 percent pay increase for its 2 million members, following a series of strike actions. And just last weekend Deutsche Telekom agreed to pay its 17,000 employees an overall 6.5 percent increase over two years.

It’s a mark of the revival of confidence among the German trade unions. Now that unemployment has shrunk to its lowest rate in two decades, and with particular industries even complaining of skills shortages, this is a good time to flex their muscles.

It’s a welcome change from their relative weakness over the past decade. Their leverage had already been dented by the mass unemployment that came in the wake of reunification of East and West Germany and the subsequent collapse of East German industry. That was only compounded by the subsequent dot.com crash and the labor-market reforms that made it easier to hire temporary and part-time workers.

The upshot was that in real wage terms, German wages actually decreased over the past decade. Between 2000 and 2007, before the financial crisis even hit, nominal wages only grew by 1 percent, compared to 2.7 percent in the euro zone, and well below the rate of inflation.

At the same time productivity soared. Data released by Germany’s Federal Statistics Office on Monday showed that while average productivity in the European Union had risen by 3.4 percent between 2005 and 2010, in Germany it was 4 percent, compared to 3 percent in France and virtually zero in Italy.

And whereas overall unit labor costs had increased by 6.2 percent in that period, the rise was only 3.6 percent in Germany, and if had not been for the crisis years in 2008 and 2009 when workers were kept on even when orders were slack, those costs would have actually have decreased over the period.

During the crisis the government and companies introduced a short-work scheme that saved many jobs. However, it is also true that during that difficult period, the unions cooperated with employers to keep companies going. Many skilled workers accepted wage cuts or took unpaid leave to help companies get through the slump in demand.

Now it’s payback time. Workers know that Germany’s export sector has been booming and that many of Germany’s industrial giants are raking in the profits. Just last week Volkswagen, Europe’s biggest carmaker, announced a 10 percent increase on its first quarter operating profit to 3.2 billion euros ($4.2 billion) after seeing a record operating profit of 11.3 billion euros in 2011.

“Naturally the workers also read the newspapers, and they read how well the German economy is doing and how it is being praised,” says Herzog-Stein. “And they are asking for their share.”

On Tuesday, the unions were out in force to celebrate May Day, the traditional day of organized labor, and to reiterate their position. “After years of pay cuts in real terms, after years of efforts to help the country through the crisis and helping save many companies and jobs, it’s our turn now,” Michael Sommer, head of the DGB trade union federation said in a speech.

That sentiment was echoed in the banners held up by many union members who took part in the traditional May Day marches. One in Berlin declared, “It’s time to cough up the money.”

Unions are also demanding a general minimum wage of around 8.50 euros ($11) an hour, something that the center-right coalition has so far resisted. However, as Chancellor Angela Merkel moves to the center, hoping to poach voters from the center-left SPD and Greens, she has indicated in recent weeks that she would now back such a move.

There are some economists who worry that the trend toward higher wages, coupled with the ECB’s low interest rates, could lead to Germany’s greatest fear: inflation. However, others argue that in fact a wage hike is long overdue and should not push prices up. “Wages are rising, but this follows a prolonged period of restraint,” Andreas Rees, chief economist at Unicredit in Munich, told Reuters.

And while it could help the rest of Europe if German consumption picked up even further, it could be of benefit to the German economy. For one, it might help offset any slump in demand in recession-hit Europe. After all, even though German exporters have been able to rely on continued demand outside of the continent, particularly from China, the euro zone still accounts for 40 percent of its market.

“If there is not also a boost in domestic demand then Germany will not remain untouched by the euro crisis,” Herzog-Stein argues. “That is why, out of self interest, we need a stronger and more dynamic domestic market.”

Spain’s army of one million waiters serve 230,000 bars and restaurants, according to the country’s association of waiters, AMYCE, which Castellanos led for more than a decade. With food and drink so integral to Spain’s culture and services so important to its economy, waiters play a key role in society. But, Castellanos explains, the relative drop in the profession’s wages, its unforgiving hours and the lack of opportunities to rise up through the ranks have undermined its social cache. And in many respects, the devaluation of waiting is representative of much broader changes in the Spanish labor market.

“A lot of waiters nowadays are embarrassed to even admit they are waiters,” Castellanos sighs. “On average they barely earn about 1,100 euros ($1,450) per month.”

In February, a new chapter was added to Spain’s complex history of labor rights, when the conservative government of Mariano Rajoy unveiled a sweeping labor reform. Its intention was to make the labor market more flexible and competitive and, in the longer term, to help bring under control Spain’s soaring unemployment rate, which at over 24 percent is the highest in Europe. Its youth unemployment rate is above 50 percent.

Rajoy called the legislation “just, necessary and good for the country … the reform that five million unemployed were waiting for.”

With its emphasis on flexibility and making hiring and firing easier, the reform has been welcomed by business leaders, who have long seen the Spanish labor market as archaic and rigid. They also believe that new measures such as allowing companies to reduce salaries unilaterally after a prolonged period of losses, or to lay off staff for the same reason, are logical.

“We cannot keep the rules of the seventies, rules that were made 40 years ago when the Spanish economy was a closed economy, didn’t belong to the European Union and was not in the middle of a globalized market as we have today,” said Alberto Nadal, of the CEOE, Spain’s main employers’ association. “We have to adapt legislation to make it more flexible.”

But many Spaniards believe the legislation went too far. On March 29, unions led a general strike against the reform, which they are still pressuring the government to alter or withdraw.

In a May Day statement, International Labour Organization Director-General Juan Somavia said, “When youth unemployment rates hover around 50 percent in Spain and Greece, it is obvious that we have reached the limits of this austerity-induced recession. We need a socially-responsible approach to fiscal consolidation. In a democracy, it is more important to retain the long-term trust of people — especially the most vulnerable groups — than to gain the short-term confidence of financial markets.”

Castellanos says this reform follows a trend of declining workers’ rights in Spain, particularly since the 1990s. As Spain modernized, its economy thrived toward the end of the decade. With a real estate bubble driving the boom, Castellanos watched many young waiters drift away from his sector.

“Wages — in catering and many other sectors — couldn’t keep up with the rate of economic growth,” he said. “People could earn about the same working as a waiter as they could working in construction, but they’d choose construction, because they had weekends off.”

Hotels and restaurants made the most of the influx of immigrants, mainly from South America at first, but later from Eastern Europe. Castellanos says many business owners even went abroad to recruit waiters.

“This phenomenon meant wages were kept down and these new arrivals from abroad didn’t demand as much time off,” he says. “Many of them were arriving in Spain alone and so didn’t particularly want to have the whole weekend free, so they’d be happy to work every day.”

Labor expert Joaquin Aparicio says these developments were accompanied by legal changes. Since the democratic transition, he says, labor legislation has been revised around 50 times, always with a view to making the market more flexible and giving employers increased powers as the pressures of the global market grew.

Initially, the glut of jobs across the Spanish economy meant there was relatively little discontent. As president of the AMYCE waiters’ organization between 1997 and 2011, Castellanos did have concerns at how his sector was changing. But he believes the association’s fractious relationship with Comisiones Obreras, one of the country’s powerful main unions, made it difficult for AMYCE to make those worries heard.

In 2003, Comisiones Obreras unsuccessfully tried to pressure the apolitical AMYCE to condemn Spain’s involvement in the invasion of Iraq. The union later shunned AMYCE’s attempts to participate in collective bargaining negotiations with employers’ groups and the government. Castellanos now rues what he sees as AMYCE’s further loss of influence since the economic crisis began to bite.

Miriam Martinez, 20, is studying at Madrid’s school of catering to become a professional waiter. Food is in her family: her father and brother are both waiters and her mother is a chef. Miriam learned the basics of the trade at the family’s Galician-themed restaurant in the mountains outside Madrid.

Dressed in a waiter’s uniform comprising a black pant-suit, a bow tie and epaulettes as she emerges from her classes, Miriam already looks the part. But the new reform worries her.

“It makes things difficult,” she says. “Because they can fire you just like that. It means you have no stability and won’t ever have any.”

And despite her ambitions, she accepts that the opportunities in the sector are limited, as is job stability.

“It’s more difficult to find a job these days and employers are paying less,” she says. “I’d rather not stay in the family business, I want to start my own place — a hotel, or a place like that. But if things don’t work out, I know I might have to fall back on my family for a job.”

A major reason for Martinez’s pessimism is the chasm that has opened up over the years between workers on permanent contracts and those on temporary ones. Permanent contracts are usually well paid, including extra bonuses and up to six weeks’ vacation and the cost for an employer to fire a worker on one has traditionally been prohibitive. Workers on temporary contracts are much cheaper to fire and have few of the rights “permanent” workers enjoy. (The recent labor reform sought to close that gap, by cutting the maximum cost of firing for those on permanent contracts from 45 days’ pay per year to 33 days.)

The loosening of regulations from the mid-1980s encouraged companies to hire workers on cheap, temporary contracts, even when they were doing permanent jobs. Meanwhile, those on lucrative permanent contracts enjoyed the stability.

“There are people in our labor market with huge privileges and they are always the last to be fired,” says Pedro Schwartz, an economist at Madrid’s San Pablo University.

Schwartz contrasts these with the unprotected young workers on Spain’s many kinds of temporary contract.

“The Spanish labor market is a jungle,” Schwartz says. “There are all these different types of contract, and they make the market fragmented and non-competitive.”

Spain’s contract system means that those on temporary contracts — often young people — are liable to get fired when a firm makes cuts, even when they are dynamic, well-educated workers.

Brain Drain

As a 27-year-old labor leader, Saul Perez knows many young Spaniards who are victims of this two-tier labor system. Despite his easy smile and status as head of a Catholic youth association for workers, the Juventud Obrera Cristiana (JOC), his face darkens as he considers the prospects for his generation.

“Most young people are very well educated, we’re the best educated generation in Spain’s history but even so we still can’t find jobs,” he says, speaking at the JOC’s small offices in downtown Madrid. The numbers show he isn’t exaggerating, with unemployment among under-25s at over 50 percent.

The kind of young people Perez refers to would, a decade or more ago, have easily found work in areas such as engineering, scientific research, the civil service, or the arts. But now, many end up doing part-time jobs removed from their expertise as they desperately look for a more suitable job. The prevalence of such young people waiting tables, for example, bothers the veteran Castellanos, who believes they allow restaurant and bar owners to push wages down and lower standards of service.

Perez believes companies and governments in Spain and across Europe have used the euro zone crisis as an excuse to cut back wages and rights and increase profit margins:

“All the economic measures being taken: the cuts, making the labor market more flexible — none of this responds to the needs of those who are working, it responds to the needs of companies, which in order to avoid suffering losses, pressure the government.”

The JOC organizes educational and training programs for young people, as well as group meetings where participants discuss and analyze their life experiences, personal, professional or otherwise. Lately, many of those reunions have a negative tone, Perez says, with participants’ difficulties finding a job or making ends meet often dominating discussions.

The walls of the JOC office are covered in posters informing of religious and work-related events. For Perez, who took part in the recent general strike against the labor reform, the two are inseparable.

“The Church’s social doctrine talks about the human value of work, the dignity of a person above all else,” he says. “And what is going on right now — the fact that we can’t even plan a life or plan to have a family — clearly goes against that Christian doctrine.”

Soaring youth unemployment has sparked the beginnings of a brain drain as young Spaniards seek work in northern and central Europe, a throwback to the country’s wave of emigration in the 1960s. In the first half of 2011, the number of Spaniards relocating to Germany jumped nearly 50 percent compared with the same period a year earlier, according to recent statistics.

This is one of the most tragic consequences of Spain’s labor history. It’s a history that has left a legacy of division: on the one hand, workers who protest and strike against reform, in the belief that unacceptable conditions are being imposed on them which jeopardize a tradition of balanced labor relations; and on the other, employers who believe these same workers are resisting Spain’s transformation into a truly competitive global economy.

Mariano Castellanos, who as a respected maitre d’ is in a unique position to understand the needs and concerns of both worker and employer, sums up the dilemma Spain is facing:

“If we want to be like other industrialized countries, we probably need many of these changes we are seeing. But when you have certain rights which have cost you so much to obtain, losing those rights is very painful.”

“This generalized austerity is prolonging the crisis. I can’t accept that. We need growth in Europe,” says Francois Hollande, the Socialist leader tipped to win Sunday’s French presidential election.

“With every day that goes by, I have the feeling that my initiative is more and more understood in Europe,” Hollande said in comments posted on his website Monday.

Hollande is enjoying an eight-point lead over incumbent Nicolas Sarkozy in opinion polls ahead of Sunday’s vote. His expected victory is the main catalyst behind the emerging pro-growth emphasis in Europe, but there are other factors.

Continuing grim economic news — Spain announced Monday that it had sunk into a second recession in just over two years — is fueling doubts that Europe’s three-year dedication to spending cuts and tax hikes may not be the best way to cure the continent’s economic malaise.

“Europe has misdiagnosed its problems in important respects and set the wrong strategic course,” former U.S. Treasury Secretary Lawrence Summers wrote in a column this weekend. “Only if growth is restored can the euro endure and European financial problems be resolved.”

The Spanish newspaper El Pais reported Sunday that the EU was preparing a 200 billion euro “sort of Marshall Plan” to fund infrastructure projects, green energy and advanced technology.

EU spokeswoman Pia Ahrenkilde Hansen said Monday that such figures were “highly speculative.” However, the EU is putting together a plan to boost growth for approval at what is expected to be a highly significant summit of European leaders on June 28-29.

Wary that the new focus risks further spooking markets, Ahrenkilde Hansen told reporters that going for growth did not mean a return to slack finances. “We are not talking about an alternative to fiscal consolidation,” she said. “The issue is not either fiscal correction, or growth. We need both.”

The late June EU summit is likely to be Hollande’s first if he succeeds in unseating Sarkozy.

Much has been made of the Socialist leader’s expected clash with Merkel due to his criticism of the fiscal discipline treaty that is the centerpiece of her response to the treaty.

Both Merkel and Hollande in recent days endorsed two of the key pro-growth ideas expected to be on the summit agenda: fast-tracking the use of remaining money from the EU’s budget for developing its poorest regions, which ran at 360 billion euros from 2007-2013, and boosting the firepower of the EU’s lending arm, the European Investment Bank.

EU Economics Commissioner Olli Rehn has suggested that lifting its capital by just 10 billion euros could enable the EIB to leverage lending of 180 billion euros.

Although they have continued to spar in media comments, Hollande and Merkel have been preparing the ground for non-confrontational relationship. There are signs of a softening of the Frenchman’s demand for a renegotiation of the fiscal discipline treaty.

Defeat for Sarkozy would however be a blow for Merkel, who offered unprecedented support for the incumbent in the early stages of the French campaign.

She also risks losing allies elsewhere.

The Dutch government, one of the strongest supporters of Merkel’s insistence on austerity for southern Europe, fell last week over its own budget-cutting plans and will face a stern challenge from the center left and far right in September elections.

Parties on both political extremes are seen profiting from a wave of discontent in Sunday’s parliamentary elections in Greece to find a successor to the technocratic government which has gone along with the tough conditions set by the EU in return for bailout packages.

Adding to the pressure over the past few days, several key players have joined the chorus calling for a growth initiative, including European Central Bank Governor Mario Draghi; top EU financial services official Michel Barnier; and the UN’s International Labor Organization.

“Austerity has, in fact, resulted in weaker economic growth, increased volatility and a worsening of bank’s balance sheets,” said an ILO report released Monday. “It is high time for a move toward a growth- and job-orientated strategy.