Education spokesman Iain Gray said the current method for measuring what teenagers do after school regarded “almost any job, no matter how temporary or insecure, as a success”.
A major overhaul of the system is needed, he added, saying the current criteria is “no longer fit for purpose”.
The latest statistics showed that in 2015-16 91.4% of school leavers went on to a “positive destination”, such as university, college, training or work, down from 92% in 2014-15.
In the most affluent areas, 96.2% of school leavers achieved this, compared to 85% in the most deprived communities.
Mr Gray said: “SNP ministers have long hidden behind ‘positive destination’ statistics which count almost any job, no matter how temporary or insecure, as a success.
“There’s nothing positive about the rise in zero-hours contracts, but that’s how they are classified by the SNP.
“We can’t start to improve outcomes until we know what a successful transition from education to employment is. The Scottish Government’s current criteria is no longer fit for purpose.
“If SNP ministers are serious about improving life chances for the next generation, they have to get serious about facing up to how well, or how badly, their policies are working.
“It’s time for a major overhaul.
“SNP ministers have been too distracted to focus on the day job and too ready to believe their own ‘spin’, so Labour is doing their job for them and putting forward a proposal that would transform the way we measure success.”
Labour favours returning to the system used by the previous Scottish Executive, which tracked youngsters’ progress over several years.
Such changes would tie in with proposals in the party’s industrial strategy, which includes plans to invest in education to tackle skill shortages, particularly in the STEM subjects of science, technology, engineering and maths, Labour said.
The party also wants to ensure public contracts are not awarded to companies that carry out blacklisting, put workers on zero-hours contracts or fail to pay the living wage.
A Scottish Government spokesman said: “The gap between the most and least deprived school leavers going into positive follow-up destinations has almost halved since 2009-10.
“Far from being bad news, this is a measure of the significant progress we have made.
“It comes against a background of unemployment being at a record low and youth unemployment being amongst the lowest in Europe, significantly below the rest of the UK.
“This year’s data also clearly shows that Scotland has more school leavers going on to initial positive destinations - 93.3% in 2015-16, up from 90.1% in 2011-12 with the proportion of school leavers in a sustained positive destination from 89.6% in 2011-12 to 91.4% in 2015-16.
“We are committed to creating a culture of fair work throughout all workplaces in Scotland which discourages the use of exploitative zero-hours contracts and other non-standard types of employment that offer workers little or no job security.”