The wage gap in companies can be reduced within a single budget year

The pay transparency directive is not a bogeyman but a way to solve the problems of the wage gap between women and men that has existed for decades. This is one of the messages from the presentation by Ema Buković, a senior human resources consultant at Selectio, held at Lider’s 15th anniversary conference Women in Business, which took place in Zagreb on Thursday.

The impetus for her presentation titled Breaking the Myths about Pay Transparency is the European Pay Transparency Directive, which is in force but still awaits implementation into domestic labor legislation. The directive aims to ensure that the wage gap between men and women for the same job does not exceed five percent. According to official data, the wage difference in the European Union is 12 percent; however, it is worth noting that in Croatia the situation is somewhat better with a difference of 7.4 percent, according to data from the Ministry of Finance.

Five Myths

Selectio started a project three years ago to help companies prepare for the implementation of the Directive, but also to make pay equality a part of organizational culture. The depth of this problem is evidenced by the fact that at the EU level, pay equality has been an unfulfilled dream for 70 years. Namely, the goal of equal pay between women and men was mentioned as early as the Treaty of Rome establishing the European Economic Community in 1957.

Buković opened with data published two days ago by the European Institute for Gender Equality, according to which women earn 77 percent of the average male salary. – In other words, a woman must work 16 months to earn the average male salary – emphasized Buković. As she pointed out, various statements about the Directive have appeared in public, some of which are grounded, while others are myths.

The first myth is that the Directive will allow an employee to know the salary of their colleague. – You will find out how much someone earns if your colleague wants to disclose it to you, and from next year they will be able to do so without breaching their contract. However, the Directive does not give anyone the right to know how much anyone else earns. The goal is to know where our salary stands in relation to the average salary for the same job, thus closing the gender pay gap within five percent – emphasized Buković.

Better Cost Control

The second myth is that due to the Directive, everyone will have to have the same salaries. This is also not true because this new European regulation acknowledges that salaries differ due to varying work experience or knowledge among employees. In this context, it is crucial that the criteria for raises must be transparent and gender-neutral. Furthermore, it is incorrect to say that compliance with the directive increases salary costs. Buković points out that companies where the wage gap is already smaller can meet the goals of the Directive within a single budget year.

– The Directive will enable better cost control in the long term because once wage balance is established, companies will ensure that new gaps do not arise – believes Buković. It is also a myth that the Directive only applies to large companies. – In most provisions, it applies to all employers; the difference is that public bodies must report on the gap, and from 2031, the reporting obligation threshold will be lowered to companies with 100 or more employees. Some member states have reduced this threshold to 50 employees – emphasized Buković.

Perhaps the biggest myth is that the wage gap does not exist. Buković responded that the numbers show significant differences, as data for 2020 indicates that women over 65 had, on average, a pension that was 29 percent lower than that of men. – Pay equality is sometimes viewed through the lens of burden; I wish it were not so because it opens the door to new fairness and new business practices. Employers will have to understand why they have a gap, job candidates will have information about the salary in the company where they applied for a job, and they will have a better negotiating position. Employees, in turn, receive information about the formation of pay grades and how salaries increase – emphasized Buković.

Entrepreneurs, do not wait for the implementation of the directive, she concluded her presentation.

To be ready for happiness

The present business environment is characterized by balancing between planning and improvisation to seize business opportunities that unexpectedly arise. The experiences in the conflict between just-in-time and just-in-case models were the topic of a panel that brought together Ivana Barišić, Export Director of the Meteor Group, Anita Cvetić Oreščanin, a member of the Management Board and founder of Solvership, Mirjana Igrec, a member of the Management Board of Kamgrad, and Mariko Shimizu, General Director of Novo Nordisk Croatia.

From a layman’s perspective, it seems that in the construction sector, standard materials are used in certain phases of construction, making it appear simple to have stock. This is not the case, explained Mirjana Igrec. – Cost estimates detail the materials and their specifications. For example, for each project, it is known which reinforcement is used. Stock cannot be planned; only after signing contracts can you start analyzing procurement and which materials go into procurement immediately, and which can be planned using the just-in-time model – said Igrec. A particular problem in material supply occurred after the Russian invasion of Ukraine in 2022. – Now we are more dedicated to analyzing materials in the cost estimate – emphasized Igrec.

To the question of how to avoid accumulating stock while being ready to jump into a business opportunity, Ivana Barišić illustrated with an example from the beginning of the year when the U.S. administration imposed tariffs on the rest of the world, including Canada. – The best definition of happiness is when opportunity meets preparedness. After Trump imposed tariffs on Canada, Canada retaliated even more strongly, particularly targeting American whiskey.

– The largest alcohol beverage chain in Canada, but also in the world, sent us an email that everyone wants to see: ‘Send all the goods you have.’ However, there was one catch, which is that all that goods must be ready for the Canadian market and comply with Canadian regulations. We had such goods – said Barišić.

– That opportunity was seized only because we were prepared. I read several of Trump’s books and understood his mindset that after escalation, calm would come very quickly. It was the same this time; in ten days, American whiskeys returned to Canadian shelves – emphasized Barišić.

Cash is King

Mariko Shimizu leads the Croatian branch of the manufacturer best known for Ozempic, a diabetes control drug that has achieved enormous global success as a weight loss tool. Shimizu reminded that before Ozempic, Novo Nordisk’s main product was insulin. – The just-in-time approach is excellent, but when Ozempic was released, we did not have sufficient stock. We had to drastically change our approach to the just-in-case model. However, we maintained a hybrid approach to optimize operations – emphasized Shimizu, who has been living in Zagreb for the past five months.

– Zagreb is very safe, which is very important to me; public transport works. I went to college in the U.S. where the bus departures were two hours apart. Compared to that, Zagreb is great – emphasized Shimizu, winning the sympathy of nearly 450 attendees.

Anita Cvetić Oreščanin reminded that the domestic IT industry turned strongly to foreign markets due to the crisis in 2010, raising the standards. When asked how to find a balance between courage and safety, Cvetić Oreščanin emphasized that one should move boldly forward, try things, and see how it affects cash flow. – Cash is king; there is no more important KPI than cash – concluded Cvetić Oreščanin.