Help wanted sighs have become as common in Harvard Square this fall ac gourmet ice cream and croissants.

While the rest of the country is reeling from a 7.4 percent unemployment rate. Harvard Square merchants are searching--often unsuccessfully--for, sales clerks, waitresses and other help.

Square restaurant managers and retailers report that they have been forced to reduce their staffs by as much as 40 percent and are suffering "employee burnout" from too many overtime shifts.

As a result, managers said, merchants customer service has been hurt by smaller staffs and lower hiring standards.

"I'm taking just about anyone, and I don't want to," said James P. Kelly, manager of the Mug 'N' Muffin Coffee shop.

"The [help wanted] sign in the window is only attracting about three people per week versus five to six per day as usual," added Collette Snodgrass, manager of the Cambridge Shop. "I don't feel like I have the choices that I used to. Two-thirds of the people applying are undesireable."

Since Harvard Square businesses employ many college students, they usually must replace a large number of summer employees who return to school with local college students. This fall, however, there have been far fewer applicants for the open positions, merchants report.

And employers and job placement organizations have noticed a marked decrease in student applications for the hundreds of part-time positions available.

"Normally I have 15 to 20 Harvard students working here. Now there are only two students and no one from Harvard," said Kelly.

Harvard students' financial need has not changed significantly over the past few years, said Martha H. Homer, associate director of the Harvard Student Employment Office. She added that high University wages--usually at least a dollar an hour more than rates for local sales positions--might be wooing students away from the Square job market.

Greg Mitchell, director of personnel for the Harvard Coop, suggested that the shortage of help is not limited to Cambridge.

Most of the employees who had been working as sales people were overqualified, Mitchell said. Now that there are jobs open in their original fields, they have moved into those positions, she added.

The September unemployment rate for Cambridge was 4.1 percent, lower than the state average of 4.5 percent, said Elliot Weiner, a program manager at the Cambridge department of Employment Security.

To solicit employees, many Cambridge businesses are advertising more, longer and in some unusual ways.

"Gradually we're getting more and more creative trying to teach people. We've tried stuffing [our shopping] bags with notices which has solicited some more response," said one local businessman.

But local employers are finding out that even when they have a job applicant lined up they may not actually have a new employee.

"Today we hired one person. She was supposed to come in at noon," said Barbara De Maio, manager of Serendipity clothing store. Looking at her watch, she added. "Now it's 1 o'clock."