Mr Frydenberg said the $4 billion policy would provide independence and opportunity to young Australians otherwise struggling during the coronavirus crisis.
However, some have raised concerns the policy doesn't do enough to support older staff who also find themselves out of work in an ailing economy.
Here's what the policy means for you.
Who is eligible for the hiring credit?
The JobMaker hiring credit will subsidise businesses so they can hire staff aged between 16 and 35.
It will be paid in two different amounts, depending on the age of staff hired under the scheme.
Businesses will be paid $200 a week for staff aged between 16 and 29. They will receive a subsidy of $100 a week for staff aged between 30 and 35.
"Having a job means more than earning an income," Mr Frydenberg said on Tuesday night following the release of the budget.
"It means economic security, it means independence, it means opportunity. We can't let this COVID recession take that away."
The scheme kicks in from 7 October and will pay businesses for each new job they create over the following 12 months.
Only staff who have been receiving Youth Allowance, the Parenting Payment or JobSeeker for at least one of the three months before they are hired will be eligible.
Staff will need to work at least 20 hours per week. All businesses will be eligible, except for the major banks.
What about apprentices?
Alongside the hiring credit plan, the federal government is also hoping to boost the number of new apprentices and trainees.
Some $1.2 billion in funding has been set aside to subsidise the cost of as many as 100,000 new apprentices.
Under this plan, businesses will be paid a 50 per cent wage subsidy, capped at $7,000 every quarter, up until 30 September 2021.
The government says existing staff who are starting a new apprenticeship will be eligible for the scheme.
What happens to JobKeeper?
The JobMaker hiring credit will replace the existing JobKeeper subsidy scheme, which the government is committed to winding down in March next year.
In essence, the government believes the JobMaker program is a more targeted form of wage subsidy than the broad-brush JobKeeper.
The $86 billion JobKeeper package was put in place six months ago, as employees faced massive job uncertainty and severe financial distress.
Government estimates 450,000 jobs for young people thanks to JobMaker
As the economy reopens, the federal government says a tapering of JobKeeper is required to ensure the program is more tailored to businesses continuing to face financial hardship.
Almost 3.6 million employees have benefited from the JobKeeper wage subsidy - with over 900,000 companies and businesses signing up to the payment.
The program had to be tweaked following criticisms that some part-time workers were earning more than they did before the pandemic.
And who gets left out?
Criticisms of the JobMaker plan have centred on the cut-off age of 35. Anyone older than 35 will be ineligible for the subsidy.
Australian Council of Social Service chief executive Cassandra Goldie said the scheme was welcome news for young Australians, but a disappointment for older staff.
"This budget provides a glimmer of hope on jobs for young people in a really tough year," she said in a statement.
"While we welcome the wage subsidy for under-35s who are badly impacted in this recession, the budget lets down 900,000 people on JobSeeker who are over 35."
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Dr Goldie urged the government to extend the scheme.
"We’re calling for the wage subsidy for young people to be urgently extended to people of all ages who have been unemployed for a year or longer."
There were also concerns about the lack of a permanent increase to the JobSeeker rate, Dr Goldie said.
"The federal budget had failed to deliver a permanent, adequate JobSeeker rate.
"It leaves more than two million people receiving higher income support uncertain about their future beyond the end of the year, when income support rates will go to their pre-COVID levels – which, for JobSeeker, was $40 a day."