Uneven recoveries from pandemic expected to exacerbate decades-old inequalities

While the rest of Italy started returning to work this week as restrictions aimed at stopping the spread of coronavirus were lifted, employees at the Rummo pasta plant could be forgiven for wanting a holiday.
The factory in the southern city of Benevento became a 24/7 operation during the country’s lockdown, with employees working extra shifts to meet demand as sales of dry goods surged.
For Cosimo Rummo, the 65-year-old president of the family company founded in 1846, the boom in sales has been bittersweet. His business may be thriving, but others in the region of Campania, whose capital is Naples, have been devastated by the economic damage inflicted by the lockdown. 
While Italy’s southern “Mezzogiorno” regions have suffered far fewer deaths in the pandemic compared with the wealthier north, the economic damage from the crisis is expected to leave deeper scars in a part of the country that has lagged behind the rest of Italy for decades. 
This north-south divide is playing out in other parts of southern Europe such as Spain, exacerbating regional inequalities that have been growing for years. In both countries, wealthier northern regions are expected to bounce back quickly thanks to their strong industrial and agricultural bases. The tourism-dependent southern areas, meanwhile, are likely to languish for longer.
The government has been too slow in delivering support for small businesses; some are simply never going to reopen
Cosimo Rummo, pasta maker
Rummo has been donating pasta and flour to the poor through churches and charities, but Mr Rummo worries the damage to an already vulnerable local economy could be permanent. “The government has been too slow in delivering support for small businesses; some are simply never going to reopen,” he said. “Poverty is going to rise”.
In Italy’s south, the hugely valuable tourism industry on islands off the coast of Naples such as Capri and Ischia has collapsed.
“Any economic recovery is likely to be far slower in the south than the north,” said Stefano Manzocchi, dean of Luiss University’s economics and finance department in Rome.
“At the end of the story we are going to have an ever poorer south of Italy, and this will exacerbate the divergence between the south and the rest of the country that has been getting worse for decades.”
During March the total number of deaths from all causes in Italy’s north compared with the average of the same month over the past five years rose by 94.9 per cent, according to Italy’s national statistics office. In the Mezzogiorno, the increase was just 2 per cent.
Spain’s most populous region and one of its poorest, Andalucía, has recorded just over 1,300 deaths from coronavirus, compared with more than 5,500 in wealthier Catalonia and more than 8,500 in Madrid. Seville, the regional capital, is due to relax the country’s harsh, two-month old lockdown on Monday, a step that has been denied to Madrid and Barcelona because of their greater problems in combating the pandemic.
A closed bar and empty street in Capri, Italy © REUTERS
Italy’s overall economic growth has been consistently weak since the last financial crisis, but the national growth numbers have masked an entrenched disparity between the Mezzogiorno and the north. While the Italian economy as a whole grew 0.3 per cent in 2019, the north and centre of the country grew 0.5 per cent, yet the economy of the south contracted 0.3 per cent, according to estimates by the Association for the Economic Development of the Mezzogiorno.
Some southern regional governors have broken with official guidance from Rome to hasten the return to business as normal. Last week Jole Santelli, governor of Calabria, faced criticism from doctors when she said table service could be resumed at restaurants in the region; only takeaway service is permitted in the rest of Italy. 
Toni Roldán, a former Spanish politician now director of the Centre for Economic Policy and Political Economy at Esade business school, said the EU should respond to such regional variations by certifying “green zones” that could “save the summer tourism season in southern Europe” by permitting, for example, travel between Germany’s Bavaria and Mallorca, in Spain.
In the longer term, Mr Manzocchi thinks the Italian government could use EU structural funds to build new road and rail infrastructure to better connect Italy’s south to the rest of the country. 
“Italian governments have always struggled with how to build the southern economy, but the south remains very badly connected,” he said. “The EU is now not only saying funds can be used to build infrastructure, but is encouraging it. This would provide a lot of jobs in the south”.
Mr Rummo argued that current short-term financial aid from the Italian government, such as funds for local regions to provide food for the needy and support payments for shuttered small businesses, would do little to alter the economic trajectory of Italy’s south.
“The government is saying it will do more to help now, but it also has to provide incentives to bring investment to the region, to provide work,” he said.
“Financial aid is important, but it is not just about giving rice to the hungry. They have to help them build something.”