China's Unexpected Labor Shortage

China is suffering from an unexpected labor shortage that is already affecting one industry. Roughly one million workers in southern and eastern China did not return to work at the Chinese Lunar New Year in early February, possibly to move back home to take advantage of lower living costs or even because of boredom, one economist theorized.

The labor shortage already is affecting the LCD and display market, according to David Hsieh, vice president of the research firm DisplaySearch. "The labor shortage has tightened the supply chain and will cause labor costs to go up," he wrote at DisplaySearch's blog.

This is definitely not a short-term phenomenon, but a big long-term challenge for companies that with labor-intensive jobs in China," Hsieh added. "China is changing from a world factory to a world market, and now workers consider assembling notebook PCs all day a boring and low-paid job. Another result of the labor shortage is that it makes inventory control difficult."