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Schoolchildren as young as 14 are to be offered £25 a week to do adult jobs to give them a "work ethic".
But the move has been branded "ill thought-out" and a "return to the Victorian workhouse".
Islington council in London wants to pay new "junior assistants" to work up to eight hours a week doing such jobs as repairing roads and clerical work.
It hopes the initiative will break the cycle of unemployment in deprived areas of the borough.
"It may be entry-level jobs like delivering post to schools or helping with highway repairs or photocopying and filing, or making tea and coffee for meetings," council leader Catherine West told the Evening Standard.
"These are real council roles and it's about trying to develop a work ethic earlier than 17 or 18.
We hope young people can get into jobs before they get a lot of free time on their hands and start mixing with people who may not be the best mentors in the world.
She said child staff would be supervised by adult workers and hoped the move would lead to the council returning to being the "employer of choice" of local people.
The Labour-run authority faces an £18 million cut in its government grant and will soon sack 140 more staff, but denied using children to fill adult posts.
Islington's bylaws state that 14-year-olds can undertake light work as long as their safety or education is not compromised.
Child employees will work after school or on Saturdays but will not be entitled to the £3.68 per hour minimum wage of a worker aged 16.
A pilot scheme will begin on the Andover Estate in Finsbury Park, made famous by former MP Ann Widdecombe in 2007 who branded it a "dump" when she stayed there for the ITV documentary, Ann Widdecombe Vs The Hoodies.
She described the estate as "very nasty, very threatening" and the youngsters living there as "thugs".
One estate resident, John Whicher, said: "We get a lot of kids hanging around without anything to do, so I think getting them into employment is a good idea. Luckily, at 14, they are too young to take anybody's job."
But opposition politicians branded the move "ill thought-out".
"This project is a return to Victorian workhouses," said Lib-Dem leader Terry Stacy.
"How many council roles happen after 5.30pm or on Saturdays? What they should be considering is viable work experience linked to the curriculum."
What do you think?
A great way to encourage young people to work and enjoy the financial benefits of working or a 'return to Victorian workhouses'?