The Government has reportedly scrapped a policy that would have gone far to fix gender and ethnic pay gaps and instead is implementing a watered-down voluntary system.

“This Government is paying lip service to pay equity. A voluntary reporting mechanism has been in place for some time now and does not work – that’s why Labour made it a requirement for large businesses,” Labour spokesperson for women Jan Tinetti said.

"This announcement is beyond disappointing. Our pay gap in NZ is currently 8.6% and has stubbornly refused to move. Other countries have had success in tackling pay gaps through comprehensive reporting regimes.

“We need to ensure we’re staying in line with international standards to attract highly skilled people to New Zealand and do what’s right as an inclusive and forward-thinking country,” Jan Tinetti said.

"When it comes to pay, transparency is the key to ending the pay discrimination that is sometimes hidden,” said Labour workplace relations spokesperson Camilla Belich said.

“Not moving forward with a pay transparency regime would take New Zealand backwards. Initially, around 900 entities would have been required to report their pay gap, increasing to almost 2,700 over the next four years. I think we can safely say voluntary measures will not come close to this.

"This is a dark day for women's and workers' rights and comes hot on the heels of announced changes to sick pay that would disproportionately affect women and the closing of the Pay Equity Unit by this Government. We call on the Govt to retain our policy,” Camilla Belich said.