The Government's proposed Fair Pay Agreements are expected to number only a "handful" each year, Prime Minister Jacinda Ardern says.
"We're talking about a handful of agreements that may be negotiated in any given year, negotiated between employers within an industry and employees," Ardern told RNZ today.
She said employers had approached Workplace Relations Minister Iain Lees-Galloway to express their interest in sector-wide agreements because they wanted a level playing field when bidding against competitors with lower labour costs because of poor conditions.
"This isn't just something that employees have been asking for so I want to correct the record on that," she said.
She told Mike Hosking on NewstalkZB it was unlikely minimum standards for small business owners would be determined by the agreements.
"It's much more likely [to affect] those who have large scale operations."
Lees-Galloway yesterday announced a working group led by former prime minister Jim Bolger would design to Fair Pay Agreements system.
"It is time to move towards new models of bargaining. It is time New Zealand adopts a sector-level approach that is common across the developed world," he said.
There had been fears that sector-wide agreements would lead to whole industries taking action but under Fair Pay Agreements, action by either side, such as strikes or lockouts, would be banned during negotiations.
Lees-Galloway said industry-wide industrial action was not in anyone's interests.
"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.
"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.
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.
Council of Trade Unions president Richard Wagstaff, a member of the working group, 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 hand grenades 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.
However some business groups remained concerned.
Leann Watson, the chief executive of the Canterbury Employers' Chamber of Commerce, said the chamber did not support a 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.