"There are other ways to deal with impasses and disagreements than just industrial action."
It would remain an option in standard collective and multi-employer bargaining.
"For these particular agreements, they are special, they do represent a significant change in the way we do industrial relations in New Zealand and we think we can do them without industrial action."
"The aim of FPAs is to prevent a race to the bottom, where some employers are undercut by others who reduce costs through low wages and poor conditions of employment. Fair Pay Agreements will help lift wages and conditions and ensure good employers are not disadvantaged by paying reasonable, industry-standard wages," he said.
"While wages have generally grown in the top two and bottom two deciles, wages for middle New Zealand have not kept up and as a result feel squeezed by rising costs, particularly in housing.
"We can and must do better for middle New Zealanders. Fair Pay Agreements will establish a framework for employers and employees to work together constructively to lift wages and productivity," Lees-Galloway said.
Bolger's group will develop recommendations on the design of the system and will report back by the end of the year.
Lees-Galloway said he picked Bolger because of his record as a minister of labour and the ability to get "his teeth into meaty issues".
The group had been given a "blank piece of paper", with a couple of exceptions, to design the system.
Bolger said there was a sense that the world was no longer fair, and middle New Zealand was an example of that.
"All the stats show that they are the group that are missing the most. We try to protect the bottom with minimum wage agreements and so forth, they're imposed by law."
Despite the involvement of Bolger, National has already signalled it will repeal any such model if it gets back in Government.
National's workplace relations spokesman Scott Simpson said any such development would restrict flexibility for employers and workers and sent "chilling messages to employers and exporters" that competition would be sacrificed to advantage unions.
National would take a long hard look at the final outcome but had long opposed such a model and he could not envisage any future National Government not wanting to repeal it.
Richard Wagstaff, the Council of Trade Unions president, is a member of the working group.
He said the CTU was entering into Fair Pay in good faith and with an open mind.
"Far too many working New Zealanders haven't been well served by the current industrial relations system and we need to build in more mechanisms that can deliver better outcomes for working people," he said.
John Milford, speaking for BusinessNZ, said the organisation and its members had some concerns.
"Having said that, we're pleased to be part of the solution, we're pleased to be around the table because if we don't put our concerns there then we can't stand on the outside and lob handgrenades in.
"You can be sure that the BusinessNZ family will represent its members vigorously and to ensure we get the right outcome for businesses as well."
PSA national secretaries Glenn Barclay and Erin Polaczuk said last year's $2 billion care and support settlement was similar to a Fair Pay Agreement and it had huge public support.
The settlement was a forerunner for today's announcement and showed Fair Pay Agreements were good for industry and workers alike, they said in a statement.
However some business groups remained concerned.
Leann Watson, the chief executive of the Canterbury Employers' Chamber of Commerce said they did not support any return to a "national award" type system.
Watson said it was heartening that Business NZ were part of the group but disappointed it would not be considering whether the reforms were even necessary.
"This is an employment model we have not seen in New Zealand for a generation - and we are unconvinced of the benefits of reintroducing it,"
She said the concept was concerning for small employers who may not be able to absorb costs. It could also see industrial action as workers sought to negotiate terms higher than the minimums set out.
What has been announced?
The Government has established the Fair Pay Agreement Working Group. The working group will make recommendations on the design of a sector-level bargaining system. Once the laws to enable Fair Pay Agreements are in place, it will be up to unions and employers to create Fair Pay Agreements in their industry or occupation.
What is a Fair Pay Agreement?
A Fair Pay Agreement is an agreement between unions and employers that sets minimum terms and conditions of employment for all workers in an entire industry or occupation. A Fair Pay Agreement is the outcome of sector-level bargaining.
What makes Fair Pay Agreements different to minimum employment standards?
The minimum terms and conditions in Fair Pay Agreements are different because they will:
• Be based on the generally accepted minimum terms and conditions in the industry or occupation
• Be set by sector-level collective bargaining between unions and employers that represent an entire industry or occupation
• Apply only to the particular industry or occupation within the coverage of the agreement.
What makes Fair Pay Agreements different to existing collective bargaining?
Fair Pay Agreements are minimum terms that will apply to all workers in an entire industry or occupation without the need to bargain with every employer individually. Unlike existing collective bargaining, industrial action (strikes and lockouts) will not be permitted in negotiations for a Fair Pay Agreement.
Who is on the working group?
• Jim Bolger – former National prime minister, former Minister of Labour
• Dr Stephen Blumenfeld – director Centre for Labour, Employment and Work at Victoria University
• Steph Dyhrberg – partner, Dyhrberg Drayton Employment Law
• Anthony Hargood – chief executive, Wairarapa-Bush Rugby Union
• Kirk Hope – chief executive, BusinessNZ
• Vicki Lee – chief executive, Hospitality NZ
• Caroline Mareko – senior manager, communities and participation, He Whānau Manaaki o Tararua Free Kindergarten Association
• John Ryall – assistant National Secretary, E tū
• Dr Isabelle Sin – Fellow, Motu Economic and Public Policy Research, and Adjunct Senior Lecturer at Victoria University of Wellington
• Richard Wagstaff – president, New Zealand Council of Trade Unions
