ISME has called for the current Social Partnership process to be abandoned and replaced immediately with a National Representative Forum.
The Irish Small & Medium Enterprises Association said Social Partnership requires new initiatives to facilitate increased participation by the wealth-generating sector of the economy and ensure a return to "national long-term competitiveness".
According to the association, the beneficial effects of the early partnership agreements were "cost competitiveness, predictability and industrial peace".
They said: "With the strike threatening unions (dominated by the public sector), the prevaricating IBEC (dominated by State and semi-State management) and a dithering Government (dominated by the desire to stay in power), it is obvious that the process is inoperable, defunct and obsolete."
ISME’s proposed solution is to abandon Social Partnership and introduce a National Representative Forum (NRF), to include small and large business representatives together with the Unions, representatives of the ESRI, Central Bank and front bench spokespersons, amongst others.
The association said: "Their remit should be to devise a strategy to address the current problems in the economy and to implement policies to assist in achieving a return to economic growth and a sustainable future for all concerned."
ISME Chief Executive, Mark Fielding, said: "Heads must be knocked together, sanity must prevail and a strengthened mandate given to Government to implement a national recovery plan, before a much harsher solution is foisted upon us by either the EU or the IMF, which will make An Bord Snip look like a picnic.
"Industrial strikes and the disgraceful antics of the Trade Unions, threatening to bring anarchy to our streets will lead to national bankruptcy. The weak-kneed big employers’ body IBEC, emasculated by the lack of a coherent plan for big business and the lack of a mandate from the small and medium business sector are ineffectual.
"The third element, the Government, is dependent on and beholden to a raggle-taggle bag of supporters whose political demands hold the Cabinet as hostage to mediocrity and soft options."