The Small Firms Association says the results of its annual employment survey are 'the worst on record'.
The SFA says that the 1,000 companies surveyed were planning to create 7,787 new jobs this year, a sharp fall from 50,243 in the same survey last year.
Director Patricia Callan said high inflation, high labour costs and high electricity, gas and local authority charges were affecting businesses' ability to create jobs.
65% of the companies indicated that they were more likely to expand in 2007 if conditions were right, down from 78% in 2006. But 48% said their expansion plans were being hit by recruitment problems.
46% of companies had vacancies, but 85% had difficulties filling them.
