In its self-styled "radical" report, Rethinking Scotland's Skills Agenda, the confederation, which represents thousands of employers, says recent skills reforms have not worked because they have not gone far enough.
Hugh Currie, its chairman, said that while participation and qualification rates have risen and more businesses have links with schools, this is not translating into the "adaptable, enterprising workforce that business needs".
"Education should not ignore business in its debates about reforms," Mr Currie says.
Iain McMillan, director of CBI Scotland, described the report as "a radical reappraisal of the skills policies of the past 10 years".
"The CBI agrees with those who say that preparation for work is not the sole function of education, but we would argue that 5-18 education which does not deliver these employability attributes is failing young people. A reformed teaching profession is vital, with modern training, development and performance management."
Mr McMillan agreed the curriculum was overloaded, and suggested that some areas may have to be "compressed", with "softer" subjects such as art and history making way for enterprise-related topics. "This is a matter for the professionals. There should be some shift towards the core skills and we also need to bing in other areas like the development of enterprising attitudes and careership."
In its submission to the McCrone inquiry, the CBI called for a competence based framework for the profession and for remuneration to be based on "transparent pay criteria", rather than "raw results", to overcome resistance to performance-related pay.
Mr Currie said that the skills report is not intended as a criticism, but as an attempt to set an agenda. Better teachers should be rewarded and recognised, either by extra payment for qualifications or by results. "We do that in business." But John Patton, president of the Educational Institute of Scotland, described the report's tone as "blinkered and whingeing".
Mr Patton said: "Even within progressive management in industry, there is an acceptance that performance-related pay is inimical to sound teamwork, good staff relations and workplace morale.
"Additional payments to a minority of teachers, based on raw score results or any other system of spurious measurement criteria, would decimate staff relationships and destroy carefully nurtured school ethos."
Danny McCafferty, education spokesman for the Convention of Scottish Local Authorities, said: "Personal enterprise skills and careers education to prepare for employment are already central under the current system." The CBI's criticisms were misplaced and its "knowledge and understanding of our education system is badly flawed". The report can be seen on the CBI website: www.CBI.org.ukScotland.