For years, Italians endured painful austerity measures that raised taxes, cost jobs, cut pensions and slashed public spending.

Determined to be part of the single European currency, they persevered with a grace and unity seen nowhere else on the Continent.Then, with the finish line in sight, tens of thousands of jobless Italians took to the streets last month in a series of rowdy demonstrations in Palermo and Naples. Italy's powerful labor unions began threatening a nationwide general strike unless the government did something to create jobs.

The message was loud and clear: "Now it's our turn."

This full-throated cry from the jobless sprang from Italy's old culture of dependence, a mentality most evident in the south, which survived on government money for years. But there is scant room in the new, euro-bound Italy for such largesse. The very reforms that are getting Italy into the currency club rule out lavish, long term handouts.

Premier Romano Prodi managed to buy social peace by promising development funds to the south, and the threat of a general strike has receded - at least temporarly.

But Prodi's pledges were only a Band-Aid for a jobs crisis that made the "The Full Monty" - a movie about a bunch of unemployed guys who turn to stripping - an instant hit in Italy.

"Unemployment is Italy's most important problem right now," said Bank of America economist Lorenzo Codogno. "You can't have sustained growth without a solution."

Italy's jobless rate now runs at more than 12 percent, well above the European average. In the depressed south, it is as high as 30 percent in some areas.

A regional economy was supposed to narrow the gap between Europe's rich and poor regions. But Italy heads into the euro as two nations: the prosperous, productive north and the chronically underdeveloped, unemployed south.

The contrasts are sharp. Italy's north is one of Europe's most affluent regions, the south one of its poorest. The growth rate in the north is nearly twice that of the south, as is the per capita GDP.

The north is a land of bustling, small- and medium-sized companies, many of them niche manufacturers, where work is so plentiful - and profitable - many young people don't bother with college. They go straight into the workplace. The towns and cities gleam with affluence, their streets lined with chic shops and restaurants.

The south is a graveyard of failed public works projects, cloverleaf exchanges to nowhere and rusting factories and plants. Deteriorating housing projects blight its cities and clumps of idle men dot its streets, a rich recruiting ground for organized crime.

But the south is also the land of oranges and olive groves, of sunshine and fabulous cultural treasures still largely undiscovered by foreign tourists. Its potential, everyone agrees, is huge.

Prodi has backed a 35-hour work week as one possible solution, claiming it would free up more jobs. But industrialists strongly believe that a reduced work week would actually hinder competitiveness, causing unemployment to rise even further. Instead, employers argue, the key is cutting taxes so that investment flows into new businesses.