Many of the reforms that resulted in a welfare state in New Zealand were brought into effect in the 1930s and again in the 1970s by the Labour Party, which was strongly supported by labor unions. This suggests that labor unions were quite powerful in some periods. However, as the economy became increasingly service-oriented the power of the traditional unions—associated with unskilled and semi-skilled workers—declined. In 1991, a new National Party (conservative) government brought in the Employment Contracts Act (ECA), which weakened the power of labor unions. In particular it abolished compulsory unionism in which, if a high proportion of workers in a workplace voted to have a union represent them, then all workers were obliged to join. It also made it more difficult to take strike action, restricted the rights of union representatives to enter a workplace, and instituted several other restrictions which ultimately weakened union power. Soon after the Labour Party was elected in 1999, new legislation, the Employment Relations Act, overturned some aspects of the ECA once again increasing the role of unions in the workplace.
Working conditions are regulated by several acts of parliament. The minimum wage in 2000 was NZ$7 an hour for adult workers and NZ$4.20 an hour for those aged 16 to 19. Minimum annual leave after 1 year of employment is 3 weeks, and there are 11 public holidays a year for which a worker must be paid if they fall on days which would otherwise be working days for them (Christmas and New Year's Day must be compensated regardless). The number of hours in the workweek are not legislated, but must be outlined as part of an employment contract; if nothing is explicitly stated in the contract, it defaults to a 40-hour workweek. Parental leave is available to either a mother or a father, and time periods vary according to particular conditions. Parental leave is currently unpaid, but under debate during 2001 is a more comprehensive system of paid parental leave.