Labour leader Andrew Little and the party's workplace relations spokesman Iain Lees-Galloway are pledging to stop a "race to the bottom" by bad employers.

Labour is promising to boost incomes and stop a race to the bottom by bad employers with an employment relations package that includes a move to base industry employment standards.

Announcing the policy on Thursday, leader Andrew Little said the aim was to prevent "a race to the bottom" seen in some industries where good employers are undercut by bad employers trying to drive down wages.

"Labour's sensible changes will help boost incomes and support employers who offer good pay and conditions. It's the right thing to do after nine years of a government that has put profits ahead of a fair return for working people," Little said.

ROSS GIBLIN/STUFF Telani Esene, left, Kristine Bartlett and Eneata Apineru celebrate their historic pay equity win in a court battle led by Bartlett.

Key changes proposed by Labour include a lift in the minimum wage from $15.75 to $16.50. It would base future rises on the cost of living for people on low incomes.

"Over time we will work towards lifting the minimum wage to two-thirds of the average wage as economic conditions allow," Little said

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The party would also replace the 90 trial period - what Labour calls the "fire at will" policy - with a law that retains 90 trials but offers protection against unjustified dismissal and a "referee" service to resolve disputes.

Little said Labour had always supported trial periods that included recourse for employees in the event of unjustified dismissal.

"Employers, particularly small businesses, have legitimate concerns that resolving employment disputes can be time-consuming and expensive."

So a referee would be used who would hold short hearings without lawyers present and make quick decisions on reinstatement or award damages up to a set cap. The service would be free to use but cost the Government $4m a year, Labour said.

But the most controversial element of the package is likely to be fair pay agreements (FPAs) that would set basic employment conditions across an industry "based on standards that apply in that industry".

FPAs "will be agreed by businesses within an industry and the unions representing workers within that industry," it said.

"The recent care and support workers' settlement is an example of how employers, employees and government can come together to create an agreement that sets base conditions across an industry."'

Kristine Bartlett, who led the legal fight for the $2 billion settlement, was present at the announcement.

Little said FTAs would prevent "a race to the bottom" seen in some industries where good employers are undercut by bad employers trying to drive down wages.

"The current law undermines good employers who pay their employees well and offer good working conditions. They can find themselves undercut by a small number of bad employers who compete by driving down labour costs. Labour's sensible changes will fix this," Little said.

FTAs would create a framework for fair wage increases where good employers are not commercially disadvantaged for doing the right thing.

The FTAs would cover all workers and workplaces in a relevant industry.

But FTA talks would begin once "a sufficient percentage" of employers or employees called for one.

That threshold and "the precise implementation" of FTAs would be developed in government, Labour said.

Other elements in the policy include a promise to promote the living wage by paying all workers in the core public service, at an estimated cost of $15 million a year, and extending that to contractors over time.

It would also double the number of Labour inspectors to 110 at a cost of $9m.

Finance Minister Steven Joyce said lots of people had jobs today were it not for the trial period.

"Actually the New Zealand labour market overall is delivering 10,000 more jobs a month, real wages are growing - wages are growing faster than inflation. These are all good things and Labour are proposing a back to the '70s solution that quite obviously they wouldn't be able to meet their own standards given their own behaviour," he said in reference to the intern scheme that brought in 85 unpaid workers from overseas.

He said National would not increase the minimum wawe to the $20 by 2020, implied by Labour's policy, which would cost several thousand jobs.

And the employers and manufacturers group the EMA said it had deep concerns about Labour's policy.

"Our current system provides flexibility which allows individual companies to bargain with their own workers to develop employment agreements which suit the needs of business and its workers," EMA chief executive Kim Campbell said.

"The proposed Fair Pay Agreements hark back to the days of the national awards system, which is an old fashioned approach to industrial relations. We've moved on as a nation and our current economic prosperity reflects this."

He also criticised changes to the 90 trial law.

But unions welcomed the proposed law changes.

CTU President Richard Wagstaff said the policy was being celebrated by working people as innovative, future focused and fair.

"We are excited to see Labour's commitment to introduce Fair Pay Agreements which would set basic employment conditions across an industry. This is such an important issue for working people whose pay and conditions are constantly under threat. The situation currently faced by Wellington's bus drivers highlights and typifies the downward pressure on wages many working people face." he said.

"The huge success of the recent equal pay settlement shows how this approach can significantly improve the lives of working people."

He said it was especially pleasing to see that Labour would improve health and safety law to ensure that all workplaces regardless of size and industry will be able elect health and safety representatives .

"This will make workplaces safer."