Redundancies hit record levels in the State over the last year, figures released today showed.
The Small Firms Association (SFA) - which published its annual economic statement today - said 500 jobs were lost every week over the last 15 months, and it claimed the trend would continue over the next year.
Director Pat Delaney said that for the fourth successive year small firms would create fewer jobs than in the previous 12 months.
"The economy has been shedding 500 jobs every week for the last 15 months," he said.
"If you look at the impact it will cost €100 million in tax and social welfare payments."
Even though small firms are expected to create 17,000 new jobs this year, Mr Delaney said this was not a high enough increase when compared to the 64,000 created in 2000.
"I think that what the business sector is saying is that in the current climate it is not in a position to invest," he told RTE radio.
"It is not in a position to expand."
He said this meant many companies had already had to take a decision to consolidate.
"There is no good new here.
"I think it is clear you are saying to 500 people every week that you have now lost your job and the likelihood of you getting a new job in the short term is very bleak."
Mr Delaney said it was vital that the Government showed a more strident approach to inflation.
"We've got to remind them that inflation is the most significant problem facing Irish industry," he added.