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Riot policemen defend their position beside a burning van during violent protests against austerity measures in Athens' Syntagma (Constitution) square, June 28, 2011. (Yannis Behrakis/Reuters/Yannis Behrakis/Reuters)
Riot policemen defend their position beside a burning van during violent protests against austerity measures in Athens' Syntagma (Constitution) square, June 28, 2011. (Yannis Behrakis/Reuters/Yannis Behrakis/Reuters)

A tale of two Europes Add to ...

'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 disproportionately hard. Manufacturing, which accounts for 15 per cent 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 labour 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 a.m. 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 metres, 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 labour costs have risen almost 50 per cent. In Germany over the same period they are up less than 10 per cent. In many ways, entry into the euro created new and unrealistic expectations for the Greeks.

Labour 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. Mr. 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 labour unions' fault."

In all, around 2,000 people have lost their job in and around Thebes in the past year according to Dimitris Dimitriou, chief of the city's labour council. Unemployment has hit 20 per cent, four points above the national average. Even companies which remain open often operate just two to three days a week and are regularly late to pay wages. "Owing two months of salaries is considered normal nowadays," Mr. Dimitriou said. Little wonder that unpaid workers have joined demonstrations against Athens' austerity measures.

AUSTERITY BITES

The factory closures and high unemployment have "ravaged households' buying power," said Nikos Stratellos, who runs a home-building store and is head of the traders' association in Thebes.

The paint and tools and building materials in his shop are almost all foreign-made. About a fifth of all stores along the main street have shut. The only store that seems to be busy is a Chinese clothing outlet. "There is no interest at all from anybody to buy the empty stores," Mr. Stratellos said. "Nobody calls up to find out how expensive they are."

Mr. Stratellos believes Athens' - and Europe and the International Monetary Fund's - response to the crisis is making things worse. "Greece is not the best place to invest," he said. "Any given day, a new law comes out and changes everything, it's impossible to make plans."

"Everybody's in a foul mood, both consumers and us. Only the banks feel good because they are sure to get their money."

That's a widespread sentiment in Greece these days. To rein in costs, Athens is forcing hospitals, schools, and police departments in different regions to merge. But many Greeks complain this will only make recovery harder.

Tax officials in Thebes, for instance, complain about plans to move the local tax office to another town. "Instead of chasing tax evasion, the government chases the tax officials," said Alexis Liaskos, who works in the local tax office and recently joined a demonstration to protest cuts.

Similarly, the number of labour inspectors has thinned, so those who remain say they can no longer check whether employers are observing the law.

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