Skills are the key elements contributing to the prosperity of nations and to better lives for individuals. In context of dynamic and complex labor market, improved matching of skills and job is paramount importance. Therefore, skills matching in the labor market needs to be properly addressed so that mismatch of skills in the labor market can be avoided. In this literature review, we will discuss on the issue of skills mismatch in the labor market. Skill mismatch can be define as the differential in skills acquired by labor and skills needed by employer in the labor market. Skill mismatch also can be viewed in term of over-under educated mismatch, self report on skill mismatch and shortage-oversupply of labor skills. Besides that, skill mismatch is caused by many factors such as geographical and educational background. In addressing skill mismatch, initiatives need to be done so that the skills acquired by the labor would match the skills needed by the employers. Before further discussing on the issue of skill mismatch in the labor market, it will be more appropriate to discuss on the definition of skill mismatch itself. Skill mismatch can be define as a situation where the skills acquired by the workers is not the same as what the employers required. Because of the differences in what the workers has and what the employer need, mismatch of skill happens. John Sutherland (2012) stated that the possibility of mismatch between skills possess by employee and