* Italy set to receive largest single chunk of EU fund
* Government hopes cash will help poorer south close gap
* Mayors warn skills shortage harming project drive
* South has lost 28% of public workers in 10 years
By Crispian Balmer and Angelo Amante
BARI, Italy, Nov 25 (Reuters) - Mayors in Italy's poor south should be relishing the prospect of billions of euros from the European Union's pandemic recovery fund, but a lack of project management expertise could mean they are unable to take full advantage of the scheme.
Italy hopes to receive 191.5 billion euros ($215.5 billion) in grants and loans from the 750-billion-euro kitty over five years, the largest beneficiary among the 27 EU states.
Focused on green transition, digitalisation, education and sustainable infrastructure, the recovery and resilience fund could help modernise the Italian economy via thousands of projects, especially in the less developed south.
"This represents a unique, extraordinary opportunity for us," Antonio Decaro, mayor of Bari in Puglia, the heel of Italy's boot, told a government roadshow promoting the scheme.
"But in order not to lose this chance, we need qualified people quickly to get these projects going."
Other mayors said they also lacked staff qualified to draw up, manage and monitor projects they want to advance.
Leoluca Orlando, who runs Sicily's main city Palermo, said he had just one technical manager authorised to sign off on EU project bids, while Gaetano Manfredi, the mayor of the biggest city in the south, Naples, said he had no technical managers.
"It is an absurd situation," Orlando told Reuters.
The south accounts for just over 30% of Italy's population and little more than 20% of national economic output, and the gap with the centre and north is growing. To help it catch up, it is due to receive 40% of Italy's EU funds.
Years of budget austerity following the 2008 financial crisis have taken a particularly heavy toll on already indebted southern administrations, forcing them to slash staff.
According to a Bank of Italy study, the number of public sector workers in the south fell by 27.8% in 2008-2018 against a 18.5% drop in the north, which has traditionally had a better track record of managing its resources.
The dearth of skilled personnel is already being felt.
Last month, all 31 proposals hurriedly put forward by Sicily for irrigation projects were rejected because they failed to meet the EU's demanding criteria.
Antonino Scilla, who heads the agriculture department on the Mediterranean island, told Reuters stringent deadlines were partly to blame, but that a general lack of expertise was hurting his region.
"Sicily has gaps. It needs qualified personnel ... We need a generational change. The average age of (state) employees here is 60, we need 30-year-olds, new graduates," he said.
The Mezzogiorno, or "noon" as the south is called in Italian, has lagged the rest of the country for decades, but the divide has accelerated this century.
Gross domestic product per capita is some 40% lower in the south than in the centre-north, while unemployment stands at 16.7% compared with 6.1% in the north. Youth unemployment is 43.3% against 20.8%.
The government hopes the EU fund will lift Italy's output by 3.6% by 2026, with sizeable advances expected in the south.
But Brussels has expressed concern about the region, whose track record of spending regular EU structural funds is poor.
"The role of local authorities in the implementation of the recovery plan is a potential weak point," said Marco Buti, head of staff for EU economic affairs commissioner Paolo Gentiloni.
"If we look especially at the south of the country, there is a natural bottleneck," he said during a visit to Italy this week, referring to the lack of experienced managers.
Bari currently has some 1,800 public sector workers, around 1,000 less than envisaged by the city staffing plan, while Manfredi said he thought Naples needed at least 1,000 more employees to take full advantage of the EU funds on offer.
"We know that skills are scarce," Innovation Minister Vittorio Colao told dignitaries and businessmen at the government roadshow, held in a packed Bari theatre.
"As a ministry, we can give partial help, but it is impossible to think we can do everything. What I hope is that companies and local authorities pool their resources."
Roberto Garofoli, in charge of implementing the national recovery plan, told the Bari audience that small teams would be dispatched by various state agencies to help manage projects.
The government has also pledged to hire 2,800 people in the south to work on programmes.
A first tender drew only 800 qualified applicants, however, with many professionals complaining that the short-term contracts paying some 1,500 euros a month were not appealing given the skills required.
The government is now revising the terms.
"The administrative machine is worn out and has lost expertise," said Garofoli. "This is a problem we inherited not from the past government, but from decades of spending cuts. It is an enormous problem that you can't resolve in a few months."
($1 = 0.8884 euros) (Additional reporting by Silvia Ognibene in Florence; Editing by Catherine Evans)
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