A labor shortfall which originated in China's key industrial areas has been spreading across the country's urban areas following the return of many workers to their hometowns during the Spring Festival holiday.

According to a Guiyang Daily report, the labor shortfall reached 20,000 workers in Guiyang, the capital city of Guizhou Province in western China this year. Sources report that the labor shortage has not only affected the manufacturing industry but also service and high tech industries.

Figures from the National Bureau of Statistics show that there were 32.82 million migrant workers in Guangdong's Pearl River Delta region in 2010, down 22.5 percent compared to the previous year. Labor-intensive industries were previously the pillars of Guangdong's economy. China Securities Journal also reported that the profit margins of many contract assemblers in the province have dropped to less than 5 percent.

Due to China's changing demographics, it has not been easy for employers to recruit enough low-skilled workers in the coastal areas. In response to labor shortages occurring across the country, many provincial governments also have refused to transfer their workers to other provinces.

"The labor shortfall is not absolute,"Cai Zhizhou, an economist at Peking University, told chinanews.com. "There is still a surplus rural labor force in China,"Cai said. He believed that workers are still not being offered sufficient compensation from potential employers.

In addition, more and more migrant workers have returned to their hometowns due to high living expenses, and limited access to social insurance, medical care and their education for their children in big cities. Some workers are deciding to find jobs in small cities near their hometowns instead of far away in large urban areas.

"I would rather work in my hometown because I can only make about 1,000 yuan (USD$152) per month in Beijing,"said Liu Xiangdong, who worked at a construction site in Beijing. "I could not save much money after paying all living expenses,"he added.

To speed recruiting, companies have promised higher salaries and even signing bonuses and other benefits to potential employees. Some larger and more successful companies have set up schools and seniors' homes for workers and their families.

In a survey conducted by 51job.com, it is estimated that 89 percent of companies in China will raise employee salaries in 2011. The pay rise is estimated to be 8.4 percent this year compared with the 7.9 percent in 2010.

The average monthly salary of a migrant worker is 1,455 yuan ($221 USD) in east China, on average 5 percent more compared to China's western areas, according to statistics from the National Bureau of Statistics. However, the income gap between the east and west was 15 percent five years ago.

A recent survey conducted by Workers' Daily shows that 90 percent of migrant workers regard salary as the most important factor when looking for a job, while 36.6 percent value the future prospects of a potential employer. About 34.3 percent of migrant workers are concerned about occupational health and labor protection, 30.5 percent are worried about overdue salaries, and 22.1 percent of them regard children's education as one of their top concerns.

"I worked for an electronic factory for half a year, and used to have headaches and feelings of nausea. I can not sacrifice my health for the job,"an anonymous migrant worker told the Worker's Daily.

"The reason behind the current labor shortage is that Chinese enterprises can not meet the compensation requirements of job applicants. We should depend on market forces to allocate resources and deal with the labor shortage in China,"said Cai.

"Chinese companies may earn less profits or even close down because they have to raise salaries, Cai said, "however, in the market economy, it is survival of the fittest."

The labor shortage in China will not last for a long time and will be improved as market forces play a larger role in allocation of resources, Cai said.