Prime Minister John Key is defending the new youth wage, saying there is a group of people that need a helping hand to get a job.
From Wednesday, employers will be able to pay 16- and 17-year-olds to be paid 20% less than the minimum wage in the first six months of their job.
The starting out wage will be set at $11 an hour, while the adult minimum wage is $13.75.
People aged 18 and 19 who are on a benefit for six months or longer, and those aged 16 to 19 on a training course can also be offered the $11 rate.
The Government says the move is to encourage employers to take on young workers who might not otherwise have been given the opportunity.
Opponents have criticised it as a backwards step for industrial relations, but Mr Key said the lower wage tips the balance in favour of young people.
"For a lot of employers, they will go out there and say, 'I'm going to give somebody a go that's been in the workforce before' and so the balance is against that younger person. That's very disheartening for them - they are good young people, they just want a chance.
"So I think it's got to be seen in perspective - the vast overwhelming bulk of youngsters actually won't go on a starting out wage."
Mr Key said when youth rates were abolished in 2008, it put thousands of young people out of work.
Business New Zealand believes the new pay rate will encourage employers to hire young people and give them work experience and skills. Chief executive Phil O'Reilly said it provides an incentive to employers. And if young people don't get on the employment ladder, it causes significant social problems.
David Jack is the managing director of Permark, a medium-sized manufacturing company which employs about 75 people in Auckland and Christchurch. Mr Jack said paying the new youth wage will lower his costs in a tight export and domestic market.
Retailers Association spokesperson Louise Evans McDonald believes older workers won't be displaced by the move. Ms Evans McDonald said it would reverse rising youth unemployment, which a report from the Department of Labour in May 2012 put at $39.9% of the country's 15-to-24-year-olds.
However, Council of Trade Unions president Helen Kelly said the change will impoverish young people who are already in unstable, poorly-paid jobs and working long hours.
James Sleep of the Same Work, Same Pay campaign said the new rate would create genuine hardship for young people and the Government needs a strategy to create jobs and boost wages for young people.
Supermarket targeted in protest
A supermarket retail chain was targeted by unionists over youth rates on Wednesday. Two dozen people joined a First Union protest outside a Pak'nSave store in Auckland.
Spokesperson Maxine Gay said the introduction of youth rates will see older workers displaced by younger ones.
Pak'nSave spokesperson Antoinette Shallue said there has been no decision yet to introduce youth rates. However its parent company Foodstuffs says it is open to new initiatives to boost youth employment in its stores.