Employers are hailing the re-introduction of a youth pay rate below the minimum wage, but opposition parties and unions say its a discriminatory move that won't create jobs.
BusinessNZ chief executive Phil O'Reilly says having to pay unskilled teenagers adult rates makes it hard for many young people to get a job.
"Not being able to get that initial job prevents many young people from gaining workplace skills, further reducing their future employment chances," he said.
The government on Tuesday unveiled the new "starting-out wage", set at 80 per cent of the adult minimum wage, which is $13.50 an hour, for the first six months of work.
The $10.80 an hour minimum will apply to all 16 and 17-year-olds in their first six months of working for a new employer, along with 18 and 19-year-olds who have previously been on a benefit for six months or longer, and 16 to 19-year-old workers in some industry training.
Labour Minister Kate Wilkinson says the new wage will help young workers get a foot in the door and give employers an incentive to hire them.
But Green Party co-leader Metiria Turei says the move is simply an attack on young workers.
"It is simply another mechanism to deliver cheaper labour to employers and is discriminatory," she said.
Labour's industrial relations spokeswoman Darien Fenton says the policy shows the government is "bankrupt of ideas" for tackling unemployment and creating jobs.
Service and Food Workers Union national secretary John Ryall says there is no evidence the policy will create jobs or teach young workers skills.
"This is simply about providing cheap labour in a country where wages are already too low and low-paid workers of all ages are struggling to survive."
The policy requires a law change, but the government is confident the new wage will be in place by April next year.
As the law stands, 16 and 17-year-olds can be paid a new entrants minimum wage of $10.80 for their first three months or 200 hours of employment, whichever comes first.
The same can be paid to 16 to 19-year-olds in some industry training.
The previous Labour government scrapped lower youth rates in 2008, and the government says Department of Labour research suggests that resulted in the loss of up to 9000 jobs for young workers.