A youth wage subsidy will use workers' tax money to further enrich company bosses and had to be opposed, Cosatu general secretary Zwelinzima Vavi said on Tuesday.
"What will happen is when workers get old, bosses will throw them into the street," Vavi said in Johannesburg.
He said youth receiving the subsidy would also not receive a full wage.
"We demand equal pay for work of equal value."
Vavi was addressing a crowd outside Cosatu House in Braamfontein.
The protest took place when red-shirted union members affiliated to Cosatu stopped the Democratic Alliance from marching on its headquarters.
The DA is demanding Cosatu stop its opposition to the subsidy.
Vavi said youth unemployment was a "ticking time bomb" with 72 percent of the unemployed being under 35 years old.
Protests should rather be aimed at the Johannesburg Stock Exchange, where CEOs and company enjoyed the fruits of South Africa's wealth.
Vavi jabbed at DA leader Helen Zille, saying DA supporters had learned to toyi-toyi by watching real workers on TV.
Earlier Braamfontein came to a standstill when Cosatu members chased the DA supporters out of the area.
Several cars had their windows smashed by protesters in red T-shirts.. Police fired teargas and used a water cannon to disperse the crowd.