The NRRP and incentives are boosting the South, but bridging structural gaps is difficult

A region that has begun to grow again thanks to a decade (and more) of incentive policies. But there is also a gap that remains deep, driving the best and brightest to emigrate. This is a trend that is unlikely to be reversed in the short term. The situation in the South is one that is still unfolding or, in the words of Gaetano Fausto Esposito, director-general of the Guglielmo Tagliacarne Research Centre, ‘a slow process of evolution and growth. To reverse in the short term a trend such as that illustrated by the data on managers who leave the South to work in companies in the North, much greater increases would be required’.

In recent years, driven by the National Recovery and Resilience Plan (PNRR) and a series of incentives ranging from ‘Resto al Sud’ (which, between 2018 and 2026, has funded almost 20,000 projects totalling 851 million euros) to the establishment of a unique Special Economic Zone (ZES), the South has undergone a revival, as evidenced by GDP and employment growth exceeding that of the Centre-North. But this is not enough.

According to Esposito, the underlying issue “is the structure of the South’s business landscape, which, alongside multinationals – such as the aerospace industry – and high-performing sectors experiencing double-digit growth, also includes ‘weak’ sectors such as tourism and construction, where workers’ pay is low. The rest is, in many cases, self-employment’.

In recent years, the South has also shown greater dynamism in the business sector. For example, the Italian provinces which, as at 31 December 2025, had the highest proportion of businesses owned by people under 35 out of the total number of registered companies were Vibo Valentia (11.1 per cent), Naples (10.3 per cent) and Crotone (10.2 per cent). ‘These are small businesses, often in the catering sector, set up partly because of a lack of alternatives in the labour market. The reality is that incentives have driven self-employment and low-paying sectors, whilst graduates from the South who aspire to managerial positions continue to move elsewhere because they cannot find opportunities in line with their profiles and competitive salaries.” Esposito says he remains ‘confident, however: we must learn from the lessons of the NRRP, which has brought benefits to the South, and apply them, for example, to the use of cohesion funds. Incentives alone are not enough; we need a sustained industrial policy’.

In addition to encouraging entrepreneurship – the core of the ‘Resto al Sud’ scheme and its successor, ‘Resto al Sud 2.0’ (aimed at those under 35) – the drive to boost the South has been underpinned by a series of employment incentives. Among the most widely used is the ‘Southern social security contribution relief’, a scheme introduced by Law 178/2020 which led to 845,000 new hires in 2024. From 2025 onwards, the measure has focused on SMEs and micro-enterprises, whilst the ZES 2026 bonus – a social security contribution relief introduced by the ‘Primo Maggio’ decree and aimed at the recruitment of unemployed people under 35 by companies in the South – is targeted at young people.