Telling job-seekers to adopt Kiwi-sounding identity slammed as gross discrimination.
Immigrants are often forced to take westernised names to get a job interview, Labour's ethnic affairs spokesman says.
Dr Rajen Prasad has revealed to the Herald that he adopted the name Harry for a few years when he moved to New Zealand in the 1960s.
But Dr Prasad, who was born in Fiji of Indian descent, realised his mistake and changed it back.
He says he has recently heard of recruitment companies telling applicants they should take on Kiwi-sounding names, which he described as "gross discrimination", and has challenged employers to practise their pronunciation skills.
The Herald reported yesterday that a 22-year-old Syrian man was told he should change his name to something more western after applying for a graduate position within Graeme McMillan's business, GM Designs, in Invercargill.
"It's just the tip of the iceberg," Dr Prasad said. "The same thing happens in Auckland and essentially it displays a discriminatory attitude. There's no justification to saying, 'My clients will not act well to somebody of a different ethnic background, because they happen to be from Invercargill.'
"I've spoken about this, I've written about this and I'm concerned about it, enough to speak out about it to say, 'Look, our employers really need to think this through in far more depth.'
"We're happy to trade with these countries that are not European countries, we're happy to have migrants from those countries here, who are very well qualified, yet they live a suboptimal life in the sense that their working areas are just so different from their significant qualifications," Dr Prasad added.
"It's a common practice where, either out of exasperation, or just plain necessity and based on advice, people take on westernised names that at least gets them into the door so they can then demonstrate their competence and personality."
Dr Prasad spoke about his decision to change his name. "I was a teenager and at that stage it was very easy to succumb but I don't see the need for anybody else to do that."
Dr Prasad's executive assistant Nina Sudiono-Price, who was born in Indonesia but has lived in New Zealand for 17 years, said that when she attached her Kiwi husband's name to her own, employers "felt more comfortable".
Mayor of Invercargill Tim Shadbolt, whose partner of 19 years is part Indian, dismissed Mr McMillan's comments yesterday.
"There's a wide range of personalities in Invercargill," he said.
"Some people will never change but others adapt to new situations."
Labour MP Raymond Huo, who was born in China, changed his name from Jianqiang Huo and said yesterday it was because "it can't be pronounced properly in English".
Former Wanganui mayor Michael Laws weighed into the debate on radio, saying the South Island was "a bit resistant about outsiders in the same way that, say, Saudi Arabia is to Westerners".
He added: "In the North Island, there'll be a lot of people going, 'Oh gosh that's dreadful, poor chap.' But in Dunedin, they're going, 'I wouldn't give him a job either, you don't know what he is going to do."'
The name game
High-profile New Zealanders and other celebrities who have taken English names
* Top-ranked female amateur golfer Lydia Ko - Bo-gyung Ko.
* Former All Black Joe Rokocoko - Josevata Rokocoko.
* Former All Black Mils Muliaina - Malili Muliaina.
* Netballer Maria Tuta'ia - Solonaima Tuta'ia.
* Labour MP Raymond Huo - Jianqiang Huo.
* Labour MP Rajen Prasad - briefly changed name to Harry.
* First Asian Cabinet minister Pansy Wong - Huang Xu Yufang.
* Former Dunedin mayor Peter Chin - Chen Ronghe.
* Designer Vera Wang - Weiwei Wang.
* Actor Jackie Chan - Kong-sang Chan.
* Actor Jet Li - Lian-jie Li.
* Martial arts supremo Bruce Lee - Zhen Jue'en.