Data from MYOB says that according to a review of three years of employment data from the MYOB business monitor, the proportion of SME employers intending to take on new staff in the year to February 2014 is only 8%.
That is down from 11% who said in 2011 they would take on new staff over the next year and 11% who said the same in 2012.
The proportion intending to maintain existing staff levels rose from 66% over the previous two years to 72% in 2013.
MYOB New Zealand general manager business division James Scollay said the local SME job market had remained ''fairly stable''.
''This is good news for the around one-third of all New Zealanders employed by a small to medium business owner, giving them confidence about their employment prospects. This should translate into stable consumer spending and investment.''
However, despite a growing confidence right across the SME sector, there had not been a significant improvement in employment conditions, with fewer employers expecting to take on new staff this year, he said.
In times of uncertainty, it was natural for business owners - especially those with no or few employees - to ''hunker down'' rather than lift their investment in people.
Otago-Southland Employers' Association chief executive John Scandrett said from what he was seeing, the SME operating environment generally was more configured around maintaining existing business levels, rather than carrying a significant emphasis on forward growth and the associated expanded employment prospects.
Most operators recognised the economic playing field could still tilt negatively at relatively short notice and, as a consequence, it was more about protecting the existing patch than moving forward into uncharted territory.
''Just at this time, there seems to be an `on edge' factor prevalent in the workplace.
"Perhaps this is, to some extent, a psychological spin-out from what we're seeing in the Wellington region,'' he said.
Labour Party economic development spokesman David Clark said it was tough for small business owners.
''They are working their guts out and not getting the support they need. The Government claims the economy is picking up but the small business community is hunkering down. Small businesses are the lifeblood of the economy but this Government is letting them stagnate.''
The problems facing small businesses were in direct contrast with the millions of dollars given to large corporates that Prime Minister John Key and Economic Development Minister Steven Joyce randomly decided to support, Dr Clark said.
Mr Scollay said the state of the local economy directly affected the confidence of owners in the future of their business and they took less risk in investing in new staff.
''This has obvious ramifications for the broader public, given the proportion of New Zealanders who are, and could be, employed by SMEs.
''This is something we can hope to see change so more households can enjoy the benefits of improved growth spreading across the whole country,'' he said.
There were some positive signs emerging.
Although employment intentions among businesses with fewer than 20 employees had fallen in the past year, particularly among small businesses with between six and 19 employees, an increasing number of mid-sized businesses were considering employing staff, Mr Scollay said.
At a glance
Micro businesses: one to five employees
Small businesses: six to 19 employees
Medium businesses: 20 to 199 employees
