Schools do not have enough funding and resources to cope with the school-leaving age being raised to 18, educators say.
Non-governmental organisations are also expressing their concern, warning that the new government policy could turn into a "bureaucratic nightmare".
The Government announced that adolescents will now be required to stay in school or some other form of education or training until the age of 18.
Prime Minister Helen Clark also introduced the pilot Youth Apprenticeship programme.
"Part of the plan will involve the roll out of the Youth Apprenticeship Scheme being piloted in schools this year across New Zealand by 2011."
Miss Clark said students were leaving school with few qualifications making it difficult for them to get a job and make a positive contribution to society.
"In these times of near-full employment those without qualifications can still find work. But a low skill base stops us growing the value of the economy and lifting our living standards to their full potential," Miss Clark said.
The Government is also forming a partnership with Business New Zealand and the Council of Trade Unions to upskill the existing workforce.
Business New Zealand agrees with the government's policy in principal, but said the Government needs to listen to the students.
Chief Executive Phil O'Reilly hoped the age of 18 would not be compulsory, warning that the restructuring could turn into a "bureaucratic nightmare". He said school is not suitable for all young people and that some want and need to go out to work.
But young people who go out to work early should still have the opportunity to be included in training and upskilling, he said.
"It is going to be expensive - both money and imagination will be needed from the Government."
He said the Government would have to look at more knowledge-based education.
"Changes of this sort are likely to be occasionally uncomfortable, not only for business, but also for young people and for teachers," he said.
Educators have expressed mixed feelings about the policy.
The principal of Hillcrest High School, one of Hamilton's top schools, Calvin Whiting, said state schools are already very under-funded.
"If the Government is going to put this as a policy, there is going to be need to be a drastic rethink of the resourcing of schools," he said.
Mr Whiting said many schools were already fundraising for the extra money they need to provide pupils with a quality education.
He said the types of courses being offered to students would also have to be much broader.
"My understanding is that students can be enrolled with a school, training provider or alternative education and work towards an apprenticeship or further training at the same time," he said.
"That is okay, as long as there are effective providers out there to deal with that. We have problems at the moment finding places for students that want to leave school under the age of 16," Mr Whiting said.
The Government is calling for more support for employer programmes and co-ordination between wide-ranging sectors of the community to give students options.
Education experts have said that the Government should look at changing the way it funds training, as there is a big difference between the subsidies paid to training-providers as opposed to 'on the job' training.
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