Nearly one-quarter of employers in China are experiencing talent shortages, according to an industry survey.
But that's down by 11 percentage points from a year earlier, according to ManpowerGroup Inc.
"Labor for production lines is in short supply, and there is an undersupply of the right talent in all industries on the Chinese mainland. Meanwhile, it's still difficult for inexperienced and unskilled workers to find jobs," said Zhang Jinrong, managing director of ManpowerGroup China.
"The pressure to find the right skills in the right place at the right time will increase." Also, he said, economic, demographic, technological and social forces will continue to evolve, so companies must have a flexible workforce.
The hardest-to-fill job categories are skilled trades (such as electricians or vehicle mechanics), sales representatives and sales managers.
It is the fourth year in a row that sales representatives ranked among the top three.
Talent shortages and skills gaps have varied effects on companies: lower competitiveness, reduced innovation and creativity, and less ability to serve clients, according to the survey.
The survey covered more than 37,000 employers in 42 countries and regions, including 1,642 on the Chinese mainland.
According to the survey, 67 per cent of employers in China reporting a talent shortage said it is having a medium- to high-level impact on their ability to meet their clients' needs. Only 10 per cent said it had made no difference.
The labour market is likely to remain tight because of skills mismatches, an aging population and a slowing economy in the country.
At the same time, fresh graduates and middle-level managers still face shrinking job prospects, the survey said.
In 2014, nearly 7.3 million graduates will enter the Chinese job market.
Employers face an "acute shortage" of senior managers who speak both English and Chinese, are willing to relocate and have familiarity with local Chinese business practices, Zhang said.
A modern vocational education system is needed to address imbalances in the labour market, he said. And business education needs improving to produce upper-management candidates. A senior manager at French retailer Carrefour SA who declined to be identified said that retail professionals and managers are hard to hire and easy to lose to competitors.
"It is a challenge the whole industry has been facing," she said.
Experienced staff who know the retail sector would greatly enhance efficiency and improve sales, she added.
A manager with an international food manufacturer with many factories based in Dongguan in Guangdong province said the shortage of skilled workers is largely a seasonal phenomenon.
Employers should keep in touch with external recruiters to prepare for increased staff demand during peak times, such as the period before the Lunar New Year. Many migrant workers return home at that time each year, and not all of them return.
She also said it is important for employers to offer professional training, a well-developed career path and psychological support for staff born after the 1990s.