Economic growth is being sacrificed by re-election politics, according to the association for small and medium enterprises.
ISME say that potential wage increases being pushed by politicians would be detrimental to businesses.
Earlier this week jobs minister Ged Nash urged businesses to adopt a living wage of €11.50 an hour in some sectors.
But Chief Executive of ISME Mark Fielding says that wage increases would hurt companies trying to dig their way out of the recession.
"Wages account for a very high proportion of the added value [in small businesses], so any increase in wages will have a detrimental effect on the bottom line for small businesses.
"While the GDP figures are showing growth of 4-5%, small and medium businesses around the country are still struggling to get out of the recession."