The Council of Trade Unions (CTU) is demanding the Government increase its commitment to job creation.
The unemployment rate rose to 7.3% - its highest in a decade - at the end of December, Statistics New Zealand's household labour force survey shows.
Last year billions of dollars in stimulus packages were initiated or fast-tracked to revitalise infrastructure and boost employment.
CTU president Helen Kelly says the initiatives the Government has put in place to stimulate the economy and create jobs have been small, and it has lost its way.
"There is a real issue now about the growing number of long-term unemployed and and youth unemployment and (the Government) should make sure that they're not just left to languish during this climb out of the recession," she says.
Stock exchange chief executive Mark Weldon, who chaired last February's Government's job summit, says the jobless figures show the economy has not grown to keep pace with the increasing number of people seeking work.
The increase is driven by people returning from overseas, lower numbers emigrating, and students leaving full-time study at the end of the academic year.
However, he told Morning Report, the number of people in work fell by only 0.1%.
Maori jobless figure 'partly result of education failure'
The Maori Party says the over-representation of Maori in the unemployment figures partly stems from failure at school.
Of the 168,000 New Zealanders recorded as out of work in the December quarter, almost 25,000 are Maori, a rise of 3,000 since the September quarter.
Maori Party co-leader Tariana Turia says Maori are disproportionately represented in unemployment figures, and much of that can be blamed on issues to do with education.
"We've got teachers in the sector objecting to being put under the scrutiny of standards and yet we continue to see these kids coming away from school with absolutely no skills, no qualifications whatsover," she says.
Youth unemployment rises
More than 72,000 people between the ages of 15 and 24 are unemployed, a rise of 10,000 on the last quarter.
Labour's Social Development spokesperson Annette King says that shows the Government has failed to grasp the seriousness of the situation.
Ms King says the National Party should implement the youth guarantee scheme it campaigned on for all 16 and 17-year-olds to get a universal education entitlement.
She says nearly a year and a half down the track, only 2,000 student places have been offered and that's a drop in the bucket.
Prime Minister John Key says the Government is working hard to make sure opportunities are created for young people. He says the focus this year will be on economic growth, flowing through to the job market.