The Irish Small and Medium Enterprises Association has called for a 12 month pay freeze among SMEs, saying that firms' emphasis must be on increased productivity and not wage increases.

Launching its latest report on employment and wage figures, ISME said that while 18% of SMEs expect to increase their headcount this year, the vast majority of firms will not increase wage rates.

The survey found that 13% of SMEs are employing more people in January of this year compared to last year, while 18% expect to increase their workforces during the course of the year.

"This indicates that SMEs will continue to play a pivotal role in revitalising the economy in the coming months. However, the emphasis must be on increased productivity leading to increased jobs, rathar than wage increases," commented ISME's chief executive Mark Fielding.

The survey found that 82% of SMEs expect employee wage rates to be unchanged or even reduced this year, while 82% of firms did not change wage rates last year.

It also shows that 76% of SME owner-managers do not expect to change their own wage rate this year, up from 69% in the previous survey. 10% of owner-mangers told ISME that they may have to further decrease their own salaries in 2014.

ISME has also called on the Government to assist SMEs and the economic recovery by reducing energy costs, some of which are still the highest in the EU. It also wants local government inefficiencies, commercial rates and upward only rents on leases to be addressed.

"The fragile signs of economic growth being reported are due to the prudence of business owners in cutting costs and margins. The economic realities of Ireland post-troika must be understood and Government, employers and employees must be prudent, productive in continuing to work on the economic revival," Mr Fielding said.