BUSINESS chiefs urged government and state agencies to focus on nurturing entrepreneurship next year as the Small Firms Association (SFA) predicted 20,000 new jobs in the SME sector.
The SFA said 2012 had been a tough year for firms but that there were still 200,000 companies in the country, employing 655,000 people.
Chairman AJ Noonan said tackling unemployment was one of the key challenges and this needs to be reflected in measures to support SMEs.
"However, if both Government and agencies are forthright in their ambition to create jobs then they must do everything to reduce the cost of employment in 2013," Mr Noonan said.
"When employment costs rise, small firms are less likely to take on new staff.
"The small business sector is the engine of the economy and it is vital that Government does not undermine its ability to drive growth and create jobs."
Mr Noonan said Government measures introduced since 2010 had already added €660m a year to labour costs, through employer PRSI changes, the pensions levy and, most recently, changes to the redundancy rebate.
"The cumulative impact of this has been a 1.4pc increase in labour costs, while at the same time both employers and staff in the vast majority of companies have taken pay cuts," Mr Noonan said.
The SFA reiterated its call for small businesses to be at the centre of the economy.
To help create its predicted 20,000 new jobs, Mr Noonan called for increased credit availability to SMEs and financing facilities to support expansion and improve cashflow, as well as no added costs related to taking on staff.