Growing skills shortages in Asia mean multinational companies operating in the region may, within five years, be forced to pay western-level wages to skilled scientists, IT specialists and engineers, according to the head of one of the world's largest recruiting companies.

A shift to higher value-added manufacturing in Asia is contributing to skills shortages and resulting in "a massive productivity hit'' for many companies investing in the region, Jeff Joerres, chief executive of Manpower, the US staffing company, told the Financial Times.

Many western companies, he said, were "clearly underestimating'' the challenge of finding adequate staff for advanced jobs, both in China and in younger manufacturing destinations such as Vietnam and Cambodia. "Companies will shift from facing a technology deficit to a talent deficit. They are trading off one productivity loss for another," he said.

Legal changes in the Asian labour market also make attracting and retaining staff more difficult, he warned. This month China introduced a labour contract that raises the compensation companies have to provide for dismissing workers. Strikes for higher pay are also becoming more common.