Overall employment rose by 1.5m in the three years to the beginning of 2013, of which 1.2m was among SMEs employing 0-249 people (including self-employment).
The impact was particularly acute for those who were previously unemployed, with 88 per cent of those who moved into work finding a job at an SME or in self-employment.
John Allan, National Chairman, Federation of Small Businesses, said:”We hear a lot about how small businesses are the engine of the economy and this research confirms this.
Micro and small businesses have by far and away been the biggest job creators since the recession. Because of their innate flexibility, they also lead the way in providing a route back into work for the unemployed, with 9 in 10 unemployed people either finding work in a small firm or starting their own firm.
The finding were part of a wider report into the value of small and medium businesses in job creation. One of its recommendations is the creation of new shared risk employee benefits insurance schemes, which it said would help SMEs recruit and retain the right staff.
At present such schemes are inaccessible to many smaller companies – partly due to high costs.
John Allan said this would help more small businesses offer occupational benefits to their staff and place them on a better footing when it comes to attracting talent.
He said: The FSB believes this is an attractive proposal both for firms and their employees which merits further investigation. We will therefore be looking to work with Government and the insurance industry to explore the feasibility of introducing such a scheme in the UK.