Strange as it may seem for a country with a workforce one billion strong, the mainland is suffering an acute labour shortage.

Or rather, it is suffering an acute shortage of skilled labour. There is no lack of warm bodies, but companies looking to recruit qualified personnel from skilled factory workers through specialists like accountants or engineers to senior managers are likely to encounter a distinct scarcity.

The mainland is not alone in this problem of course. In its annual Asian Development Outlook published yesterday, the Asian Development Bank warned that the region 'lacks a wide class of occupational skills relevant to a modern economy'. Moreover, the problem is not limited to a handful of places, 'but is prevalent enough to present a genuine risk to the region's long-run growth'.

Without sufficient numbers of suitably qualified professionals, says the ADB, productivity deteriorates, capital returns fall, wages rise, staff turnover increases and administrative costs go up. As a result business efficiency declines and 'whole industries and even entire economies may suffer'.

It is not just factories that are short of staff. As incomes have risen around Asia, demand has grown for a whole range of services from investment to health care, easily outstripping the supply of available professionals.

Although the skills shortage is not limited to the mainland, the scale of the problem dwarfs that of its neighbours. According to management consultancy McKinsey, between 2003 and 2008, the mainland will have produced nearly 16 million university graduates, including more than 5 million with engineering degrees.

Most of those, however, will have spent their time at university focused on theoretical learning. Few will have much experience of team exercises in practical problem-solving; the sort of thing employers are far more interested in.

Of the 16 million graduates the mainland has turned out in the last five years, McKinsey estimates that only about 1.2 million meet the standard of skills required by modern multinational companies. Over the same time period, the consultancy estimates, big multinationals doing business there, together with foreign-invested joint ventures, had demand for 750,000 new graduate employees, most of the available pool. Discounting the 450,000 unavailable because they were in the wrong place, that would leave just 65,000 graduates to fill vacancies at local companies and smaller multinationals.

Many of the ADB's proposed solutions to the skills shortage have little relevance to China. Importing skilled labour may work for small, wealthy Singapore, but the mainland skills deficit is so vast, importing talent would suck the rest of Asia hollow.

Equally, for the government to retool the university system at short notice to turn out more technical graduates may have worked in Ireland, where the numbers involved were small and their educational attainments high to begin with. But the huge mainland educational system simply lacks that sort of flexibility.

The country is already doing well at reversing the brain drain of its graduates to other countries. But ultimately the answer will lie in a complete overhaul of the university system to produce more employable graduates.

The ADB favours enlisting the private sector to provide funding and know-how. It cites the success of Korea's Postech technical university, established by iron and steel company Posco, as well as co-operation between Microsoft and four mainland universities.

Even with private sector involvement, however, change will take a generation, which means business people will be grumbling about their staff for an awfully long time to come.