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Special Report: A tale of two Europes

Jul 5, 2011, 2:37 a.m.

It's all, thinks Wolf, part of a much deeper problem. "There is too much country-specific nationalistic pride and egotism," he said. "The problem is that countries have to start thinking that they are part of a union. Currently they don't."

BY THE NUMBERS

Study the basic numbers and it's easy to see that despite sharing a currency, Germany and Greece are miles apart -- and not always in the way you might expect. For one thing, Greeks work about 30 percent more than Germans, at least according to the Organization for Economic Cooperation and Development, which put the average number of hours worked in Greece in 2009 at 2,119 compared with just 1,390 in Germany.

Less surprisingly, the rewards in Germany are considerably better. According to one Greek labor union, average gross annual wages in the Greek private sector stood at 28,548 euros ($41,480) in 2009 against 43,269 euros in Germany.

That gap continues after retirement. An average 40-year-old German, who works until the normal retirement age of 67, could reckon on a pension in the region of 2,200-2,600 euros a month. In Greece, where the mandatory retirement age is 65, many people retire in their late 50s under generous rules that define many types of industrial work as "hard and unhealthy labor." An average blue-collar worker there can expect a pension of less than half the German level.

"FINISHED"

The introduction of the euro was meant to steadily close some of those gaps -- and in terms of salaries it has begun to do that. But in Thebes, which hosts some 10,000 companies and is one of Greece's biggest manufacturing hubs, change has come at the expense of jobs.

The recession has hit the city disproportionally hard. Manufacturing, which accounts for 15 percent of Greece's economy, had already drifted into the doldrums well before the debt crisis erupted in late 2009. The PMI index for manufacturing has been below the 50-mark, which separates expansion from contraction, in almost every single month since October 2008.

"Fifteen years ago the companies had such demand for labor that they sent out cars with loudspeakers to call the villagers," remembered Thanassis Karabetsis, a town hall employee. "Now, if you've lost your job, you're finished."

At 9.00 am on a recent Monday morning, an industrial area on the city's outskirts was marked by empty parking lots and deserted roads. A sign outside an abandoned plant read: "Industrial area, 5,000 square meters, for sale."

It's not just the downturn that's to blame. Thebes, like Greece itself, is as much a victim of the boom years as the bust. Since 2000, Greek labor costs have risen almost 50 percent. In Germany over the same period they are up less than 10 percent. In many ways, entry into the euro created new and unrealistic expectations for the Greeks.

Labor unrest added to the problems. Panagiotis Kalabokas worked at a factory run by German precision tool manufacturer Diamant Winter for 29 years. But in 2009, following a year of strikes, the factory closed, shifting production to other locations, such as Spain. Kalabokas was able to retire but more than 100 workers lost their jobs. "It was a shock to me to see the plant empty, it almost gave me a heart attack," he said. "Bad management was to blame, but it's also the labor unions' fault."

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