Southern Italy is growing more than Central-Northern Italy for the second consecutive year. GDP in the South is expected to increase by 0.9% in 2024 against 0.7% in the rest of the country, according to the Svimez Report which describes how the role of the Pnrr is “decisive”..
The plan is worth 1.8 points of GDP in 2024-2026. However, the favorable growth gap in the South is reduced compared to 2023 and from next year, the Association highlights the risks of a return to “normality” of more stunted growth compared to the rest of the country in 2025 and 2026, due to the return from policies to stimulate investment and support family income.
Without tax relief, 25 thousand jobs in the South are at risk
The repeal of the Southern Contribution Reduction envisaged by the maneuver puts around 25 thousand jobs at risk, according to Svimez estimates in the 2024 report. In particular, it will lead to a reduction of two tenths of a point in the growth of the GDP of the South and of three tenths of the employment. The allocation canceled as a result of the cut in the subsidy is equal to 5.9 billion for 2025 alone. The association explains that «the 2025 Budget Law provides, as compensation, for the financing of a new Fund for interventions in the South, with an allocation equal to approximately half of what was cut and without yet “a clear destination or an implementation tool”.
The automotive crisis hits the South: -100 thousand vehicles
The automotive supply chain is the sector on which the industrial future of the South will be played out. The Svimez report states this, recalling that the factories in Southern Italy supplied almost 90% of the vehicles produced in Italy in the first 9 months of 2024, but lost more than 100 thousand units in 2023 (-25%). The Melfi plant alone saw a loss of almost 90 thousand units. To make the situation worse, the investment of over 2 billion for the construction of the battery gigafactory in Termoli has been suspended. The automotive supply chain extended across Southern Italy is worth almost 13 billion in terms of added value and around 300 thousand employees, more than half in Campania (30%) and Puglia (21%), followed by Sicily (21%) and Abruzzo (11%). %).
Away from the South, in 10 years 200,000 graduates in the North
In the last 10 years almost 200 thousand young graduates have left the South for the Centre-North. And 138 thousand have moved from Italy to abroad, according to the Svimez report. Among other factors, this choice is linked, according to the study, to low wages: since 2013, real gross wages per employee have fallen by 4 percentage points in Italy and by double (-8) in the South, against a growth of 6 points in Germany . The report speaks of “dejuvenation and flight of young people”, so much so that primary schools are at risk of closure in 3 thousand municipalities due to lack of children and says: “the emergency is emigration”.
Work is recovering in the South but wages are collapsing: -5.7%
The recovery of the last three years has brought employment back to mid-2008 levels in the South but real wages have collapsed and poverty has grown even among those who have a job, so much so that there are 1.4 million poor workers, according to data from the Svimez 2024 report. Between the fourth quarter of 2019 and the first half of 2024, real wages fell by 5.7% in the South and by 4.5% in Centre-North, compared to -1.4% of the Eurozone average. “A real collapse in the South – we read in a note – caused by a more sustained price dynamic and delays in contract renewals, in a labor market that has reached pathological levels of flexibility” with more than one worker in five hired on fixed-term contracts.
The municipalities on the Pnrr are doing well, transport is slow
PNRR projects worth 105 billion out of a total of 140 billion euros are underway, and the different areas of the country seem substantially aligned in the implementation path, according to the Svimez report. The municipalities are doing well, managing Pnrr projects worth around 30 billion. In the South, the municipalities respond well especially to the implementation of investments related to social infrastructures with a higher amount initiated per capita compared to the figure in the Centre-North. However, the more complex infrastructures, such as transport ones, are slow to see a percentage of open construction sites of less than 20% and slightly higher, for projects exceeding 5 million euros, in the South (27% against the average of 26% ).