ONE IN FIVE small firms expect to take on new permanent staff over the next three months, according to an industry report.

The Small Firms Association’s study of its members found the job market stabilising, with 18 per cent saying they expected staff numbers to decrease before the end of 2011.

Small firms also had a positive outlook for next year, with 26 per cent anticipating a growth in staff numbers and 58 per cent expecting no job losses. However the director of the SFA, Patricia Callan, said the environment for small firms was still very challenging.

“The overall survey results show that the pace of job losses within small businesses has slowed,” she said. “However, the forecast for job creation remains weak.”

The association has called on the Government to provide clarity on future fiscal adjustments under the austerity plan and to focus on spending cuts rather than tax increases as a way of reaching financial targets.

High costs of business are a significant barrier to growth for small firms, the association said.

“Our ability to create jobs has been severely damaged by a loss of competitiveness and the lack of jobs is one of the biggest issues facing the economy,” Callan said. “The key priority is to create an economic environment that is conducive to small business growth and that restores consumer and business confidence.”

The SFA’s third-quarter survey was carried out among 649 companies employing 13,384 people.