New Zealand workplaces are receiving fewer signals encouraging them to invest in inclusive workplace cultures, according to a recent review by Te Uru Tāngata Centre for Workplace Inclusion.
These signals form what Te Uru Tāngata calls the permission environment – the laws, government employment practices, procurement requirements and public rhetoric that help shape what employers see as expected, valued and acceptable.
Chief Executive Maretha Smit says this matters because almost everything that makes a workplace inclusive in New Zealand is optional.
“There is no mandatory pay gap reporting, no targets, no procurement conditions of any consequence. Employers do this work because they judge it worth doing.”
But over the past three years, the conditions that encourage employers to do that work have shifted, with potential long-term consequences for New Zealand’s economic and social wellbeing.
“We have 400,000 people underutilised in a tight labour market, a disabled employment rate half that of everyone else, and skilled migrants driving Ubers with engineering degrees.
“That should concern anyone worried about the economy or about how well this country is holding together.”
After witnessing the global backlash against diversity, equity and inclusion (DEI), Te Uru Tāngata wanted to understand the extent to which this shift was being reflected in New Zealand workplaces.
Its findings are detailed in The Permission Environment – Workplace inclusion, jobs and productivity: What has changed since 2023? Download the full report.
The report examines four channels that influence the permission environment: the statutory floor established by employment law; the exemplar effect of the Crown as an employer; market signals created through government procurement; and the rhetoric of political leaders.
Changing the statutory floor
The report identifies at least 10 changes to employment law during the current Parliamentary term that have removed structural protections for employees and left more inclusion measures to employer discretion.
These include the repeal of the Fair Pay Agreements Act in December 2023, the Equal Pay Amendment Act passed in May 2025 and the Public Service Amendment Act passed in June this year.
Setting an example of good practice
The report also examines the Crown’s role as an exemplar – an employer whose size and influence can establish norms beyond the Public Service.
“Because the Crown employs tens of thousands of people, bargains with major occupational workforces, publishes its own workforce data and influences professional labour markets, what it does establishes norms well beyond its own payroll.”
Prior to 2023, Maretha says, the implied norm was broadly that good employers measure inequity, address occupational undervaluation, design work flexibly and invest deliberately in representation and inclusion.
During this Parliamentary term, that signal has shifted.
“Improvements to employment conditions are increasingly framed as costs to be justified rather than investments offering value in participation, retention, capability and fairness which should also be measured.”
Changing market signals
Government procurement is another way public policy can influence private workplaces.
Last year, the Government Procurement Rules were reduced from 71 to 47 and renamed from Rules for sustainable and inclusive procurement to Responsible expenditure of public funds.
The Broader Outcomes framework was also replaced by a rule requiring suppliers to demonstrate economic benefits to New Zealand, removing mechanisms that had used procurement to encourage outcomes such as skills and training, improved conditions for workers in vulnerable sectors and opportunities for Māori and Pasifika businesses.
Setting the boundaries
The final channel examined is political rhetoric.
Last year, the United Nations Committee on the Elimination of Racial Discrimination recorded concern about hate speech by politicians and public figures in New Zealand and the misrepresentation of affirmative action as racial privilege.
“What senior political figures can say publicly helps establish the boundaries of acceptable expression. Those boundaries travel into workplaces. They affect what employees feel able to say, what managers regard as requiring intervention, and what people on the receiving end believe is safe or worthwhile to challenge,” Maretha says.
The cumulative effect is not prohibition. It is permission to do less.
None of these changes, taken alone, determines what happens inside a New Zealand workplace.
Employers remain free to measure inequity, recognise overseas qualifications, design work flexibly, examine pay gaps and address barriers to participation. Many will continue to do so.
However, the report finds that the environment surrounding those decisions has changed. The statutory floor has become less structured, the Crown has stepped back from its role as an exemplar, procurement carries fewer inclusion expectations into the private market, and political rhetoric has made the legitimacy of inclusion more contestable.
“That matters because the costs do not disappear when the practice does. A disabled person who cannot enter employment remains outside the productive workforce. A migrant working below their capability remains misallocated. An underpriced occupation remains difficult to staff. Knowledge that employees do not contribute remains unavailable to the organisation.
“New Zealand needs employers who use the capability available to them, apply standards fairly, notice where their systems produce avoidable barriers, and create workplaces in which people can contribute what they know.”