In an open letter to Alistair Darling, CBI director general Richard Lambert said: "A large increase in the cost of employment, at a time when unemployment will still be elevated, is ill-conceived.
"Other, less distortive methods of raising revenue should have been considered. The CBI feels strongly that imposing an extra tax on employment will jeopardise jobs at a time when the economic recovery is likely still to be fragile."
Following the extra 0.5% increase announced in last December's pre-Budget report, the employer NI rate is set to increase by 1% from April 2011, raising around £3bn a year for the Treasury.
However, the proposed rise has been widely criticised by business groups, including the CBI, CIPD and the BPIF, all of which have claimed that it would hamper the economic recovery.
The CBI has also called on the Chancellor to use his final pre-election Budget to set out more details for departmental spending plans, "in order to boost confidence in the UK's public finances and provide economic stability".
The organisation's calls for a "fully credible plan for how to restore fiscal balance" follow a pre-Budget report that announced plans to halve the UK's £178bn deficit within four years without setting out detailed plans for how this would be achieved.
"This Budget comes at a pivotal moment for the UK economy," said Lambert. "The UK's deficit, though worryingly large, is still manageable, but the government must act now to set out a convincing, credible pathway for balancing the books."
According to the CBI, the government should speed its fiscal consolidation plans to bring the UK's finances into balance by 2015/16, two years faster than under current plans.
The CBI added that this should be achieved through a combination of lower overall spending and public service reform, "rather than resorting to damaging tax rises".
Ian McCafferty, chief economic adviser to the CBI, said: "In our view, fiscal balance should be achieved by curbing spending rather than increasing taxes, and cutting current rather than capital spending. This balance of measures is the most supportive of growth, but will mean grappling with thorny issues such as poor public sector productivity, pay and pensions."
Lambert added: "The Budget should do whatever is necessary and possible to maintain and strengthen this country's reputation as an attractive place for investment. The planned rise in NI contributions is particularly ill-judged. It is a direct tax on jobs and should be reversed."
