It's a "historic day for everyday workers" after the Fair Pay Agreements Bill passed its third reading in Parliament today, the Government says.
The bill allows employers and employees to collectively bargain at an industry-wide level.
It passed with support from Labour, the Greens and Te Pāti Māori, while National and ACT opposed it.
Workplace Relations and Safety Minister Michael Wood said the legislation will lift incomes and working conditions for Kiwis on low to medium incomes.
"By increasing bargaining co-ordination to agree minimum employment terms within a sector, outcomes for vulnerable employees will be improved and we will see growth in the incomes of New Zealand employees."
Wood said Māori, Pacific peoples, youths and people with disabilities are overrepresented in jobs that will benefit from a Fair Pay Agreement (FPA).
FIRST Union has welcomed the legislation, saying it will result in a "fairer and more prosperous future" for New Zealand.
"FPAs pave the way for a rebuild of some of our most critically undervalued industries, and complement our wider goals of reducing inequality, upskilling New Zealand workers, reducing regional wage disparities and returning a fairer share of company profits to the workers who created them," said Assistant General Secretary Louisa Jones.
What are the other parties saying?
The Green Party has celebrated the passing of the "landmark" legislation.
“Fair pay agreements are about making sure that more people – those who work in supermarkets, cleaners, security, early childhood centres – have good conditions and are paid what they deserve," said Greens Workplace Relations and Safety spokesperson Jan Logie.
“Peel back the layers of the cost of living crisis and what we actually have is an inequality crisis. Wages have not kept up with inflation and people have to work longer in order to make ends meet."
On the other side of the political aisle, both National and ACT have promised to repeal the law if they get into Government next year.
Both parties say FPAs are "compulsory unionism" and say it will harm productivity.
“We all want higher wages and better conditions - especially during a cost of living crisis. But the only sustainable route to higher wages is more productive businesses," said Workplace Relations and Safety spokesperson Paul Goldsmith.
"It will force employers and workers within a sector to bargain for minimum terms and conditions for all employees in that industry or occupation, regardless of whether or not they want to be included."
“MBIE has warned the Government that FPAs will reduce productivity and make it harder for employers to grow their businesses," said ACT Small Business spokesperson Chris Baillie.
"If they want to grow wages and give employees a fairer crack, they need to stop hammering businesses and allow the labour market to flourish."
The FPA system will come into effect on December 1.
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