Italy's pandemic recovery plan must halt demographic "tsunami" in south - ISTAT

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(Reuters) - Italy's south is on track for a "demographic tsunami" if it fails to capitalise on European Union pandemic recovery funds to bridge the gap with the productive north, statistics bureau ISTAT said on Wednesday.

Italy - the biggest recipient of the EU's fund - aims to use a large chunk of the roughly 200 billion euros ($217.56 billion) it is due for projects connected to social and territorial cohesion, including closing its deep-rooted north-south divide.

At least 40% of the total outlay will be spent on the south.

Rome has historically been notoriously inefficient in using European grants and is behind schedule in investing the Recovery Fund cash it has so far received from Brussels.

The funds could be used to help put north and south on an equal footing in 10 key areas, ISTAT said, including gross domestic product per capita, education and digitalization.

This would contribute to stemming the outflow of young Italians from the south in search of better economic and job prospects in northern regions or abroad.

The bureau has recorded youth employment rates in southern regions well below the national average for decades. In densely populated urban areas such as Palermo, Taranto and Naples, only one out of three residents under the age of 35 had a job in 2021, ISTAT added.

It projected the population of the "Mezzogiorno" - Italy's six southern regions plus the islands of Sicily and Sardinia - will fall below 20 million in 2030 for the first time since its records began.

In addition the average age of the regions will surpass the centre-north in around 2035 as a result of youth migration.

"The consequences of the delays in (developing) the south are heightening the frailties in its socio-economic structure through a sort of 'demographic tsunami'," the report said.

"If this can't be halted, the trends in place could lead to a progressive and unsustainable involution of the human capital of most of southern Italy."

The problems are not limited to the south. A shrinking workforce and chronically stagnant growth have long afflicted the euro zone's third economy.

A lack of job security and affordable child care are often cited as a hindrance to births, while an ageing population crimps productivity, limits innovation and raises welfare bills.

Italy recorded less than 400 thousand births in 2021, the fewest since its unification in 1861, according to an ISTAT report in September. A baseline scenario by the bureau pointed to its population shrinking from 59.2 million in 2021 to 54.2 million in 2050 and 47.7 million in 2070.

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