In December 2022, New Zealand will initiate an innovative sectoral bargaining policy, called the Fair Pay Agreements Bill, that may serve as a model for pro-labor advocates in the United States.1 The policy details of the new agreements are valuable—but most importantly, New Zealand’s experiences and actions highlight the need to incorporate sectoral bargaining in any policy to improve working conditions.
Sectoral bargaining, sometimes called broad-based bargaining or industrywide bargaining, is a type of collective bargaining between unions and employers that sets minimum standards on issues such as wages, benefits, safety, and training for all workers in a sector or occupation.2 Although it is often contrasted with worksite-level bargaining, in reality, sectoral bargaining typically works in conjunction with worksite-level bargaining: Sectoral bargaining helps set compensation floors that cover most workers, while worksite-level bargaining can improve on these standards as well as tackle workplace-specific issues.3
New Zealand adopted its new sectoral bargaining policy as a proven solution to rebalance power between workers and employers and address stagnant wages, rising economic inequality, and low productivity. Policymakers recognized the need for sectoral bargaining—rather than just improvements to worksite-level bargaining—because of New Zealand’s history with bargaining agreements as well as international research.
In the late 1980s...
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