In a litany of woes Bank of Italy Governor Ignazio Visco listed this week, the sheer number of his fellow citizens who don’t bother seeking work was especially bleak.

The proportion of people active in the labor market is among the lowest in Europe, he complained to the country’s economic elite gathered in the gold-painted Shareholders’ Hall of Palazzo Koch, his institution’s home in Rome. Worst affected is the poorer south of Italy, where the governor hails from.

The labor market was only one of many weaknesses Visco highlighted in his annual speech on Tuesday. It may prove among the trickiest for the European Union to fix as it deploys skills-focused programs in its bid to reinvigorate Italy with 200 billion euros ($214 billion) of Recovery Fund cash.

Unlocking the jobs potential trapped in the inertia of the euro zone’s third-biggest economy is one of the few options available to fight the consequences of a demographic decline so stark that the world’s richest man, Elon Musk, has warned the country risks having no people left.

“Overcoming the factors that hinder productivity growth has become even more necessary” given the population outlook, Visco said. It “can only partly be countered by an improvement in the migration balance and by an increase in the labor-market participation.”

The numbers are stark: 2.62 million people are available for employment but not seeking it, more than the actual tally of jobseekers. On top of that are 872,000 part-time workers who would like more hours, and 90,000 people who want a job but aren’t immediately available, according to Bloomberg calculations based on Eurostat data.

“It makes me really sad to see these numbers,” said Andrea Prencipe, professor of innovation management and rector of Luiss University in Rome. “This points to a problem that goes beyond the usual issues of matching supply and demand, and skills. It’s a problem of mindset.”

As with many of Italy’s economic problems, the south suffers the most. Last year, when a measure of national unemployment averaged 9.5%, it was almost 24% in the area of Naples, where the 72-year-old Visco was born. The country’s third-biggest city, it is often seen as a proxy for the malaise and organized crime associated with that half of the peninsula.

Further east in Isernia, a landlocked province where the governor’s family comes from in the mountainous region of Molise, joblessness exceeded 12%.

Visco also highlighted how the country stands out for the low proportion of women in the workforce, exacerbated by the difficulty of regaining employment after having children.

But at the root of the problem is schooling. Low labor participation is “closely connected with educational attainment,” the governor said. It’s a commonly shared view.

“We have a low-skilled labor force,” Italy Finance Ministry Deputy Secretary Maria Cecilia Guerra lamented on Rainews24 on Wednesday. “This has a big impact on our growth prospects.”

That isn’t easy to fix. Prencipe, the Luiss professor, says that simply throwing money at the problem won’t address it, even though the EU Recovery Fund does have initiatives devoted to skills and education.

He says young people find it hard to enter the workforce after studying in Italy and need better-honed training that makes them nimbler at a time of faster-evolving employment requirements and lengthening lifespans.

Adapting to the shifting labor market is a challenge for Beatrice Tarantino. She has struggled to find a job since losing hers at an insurance company in Rome during redundancies in 2018. Currently helping a friend with childcare, she plans to return to the fray of seeking work later this year.

“After the pandemic struck, it got harder to look for a job,” the 49-year-old said. “Now I’m starting to feel too old to find one.”

Encouraging people to enter or return to the labor market is fundamental. The alternative, as Visco suggested, is that the country’s best and brightest emigrate, as almost 1 million already have done, while others do nothing. Such a challenge puts the onus on Italy to ensure that its vast injection of EU money isn’t only spent, but spent well.

“It’s not a matter of how much funding -- which is considerable overall -- but of how we’re going to use it,” said Prencipe. “We need it to really tackle the problems related to labor and to learning.”