Gender Equality Ceases to Be a Recommendation and Becomes Law

Europe is entering a new era of business governance in which gender equality ceases to be a recommendation and becomes a legal obligation. By 2026, member states must incorporate a series of key European directives and policies into their legislation that will fundamentally change the way companies hire, pay salaries, and choose their leaders. Pay transparency, greater representation of women on boards, and a new Gender Equality Strategy by 2030 are just part of the obligations ahead. Croatian businesses, like every other in the EU, will have to respond to these demands, and faster than it may initially seem.

What is changing

The first prerequisites for changes in business are legal changes. The Ministry of Labour, Pension System, Family and Social Policy states that due to the Pay Transparency Directive, Croatia must amend and supplement the Labour Law and the Gender Equality Law. This means that all employers will have, as stated by the Ministry, an obligation to introduce so-called pay structures, i.e., a system for classifying and evaluating jobs, as early as next year. It is still unclear who will conduct the oversight, but there will be oversight because ‘once the Directive is transposed into the relevant laws, they will also foresee supervisory bodies and possible sanctions for violations of legal provisions,’ they responded to us in the relevant ministry. The Directive anticipates the inclusion of responsible inspection bodies and easier access to justice for victims of gender discrimination, they emphasize, adding that the types and amounts of sanctions are yet to be decided in working groups. Regarding the Directive on women on boards, they note that it has already been transposed into the Companies Act.

In short, there should be no pay gap when it comes to women and men, just as there are, at least on paper, no issues with women on boards. Or are there?

A Guide for Systematic Inclusion

According to the CEO of the Zagreb Stock Exchange, Ivana Gazić, the representation of women in management and supervisory boards of listed companies is gradually increasing, as shown by the Hanfa Corporate Governance Report, which analyzes companies listed on the Zagreb Stock Exchange. However, it is still below the level that would be considered balanced.

– It is positive that 89% of issuers have set a targeted percentage of female members in management, but the share of issuers without a female member in management in 2024 is still over 50%, and those without a female member on the supervisory board is 30%. The trend is positive, but still slow. Some issuers are actively developing diversity and inclusion policies, but at the same time, a large part of them still needs to systematically include women in the highest management structures – emphasizes Gazić, who believes that achieving compliance is attainable, especially for large issuers that already have more developed corporate governance processes.

However, she adds, this will require timely succession planning, strengthening diversity policies, and a stronger focus on identifying and developing female talent for positions in management and supervisory boards, and she expects that the regulatory framework will accelerate this trend.

Gender Imbalance

Hanfa reports that together with the Zagreb Stock Exchange, they accepted the amended Corporate Governance Code at the end of last year, which will apply from January 1, 2025, to all companies whose shares with voting rights are listed on the regulated market of the Zagreb Stock Exchange. One amendment relates to achieving gender balance in management and supervisory boards by prescribing quotas, but also at the level of senior management. These recommendations have set stricter requirements for issuers than those prescribed by the Companies Act, they stated.

– From 2015 to 2024, there has been a slight increase in the share of women in management from 15% to 21%, and in supervisory boards from 21% to 23%. The average share of women in management was 16%, and in supervisory boards 22%. Interestingly, in 2024, as many as 54% of listed companies did not have a female member in management, and 30% did not have a female member on the supervisory board. Given this statistic, it is evident that companies must make additional efforts to achieve gender balance in management positions – clearly warn Hanfa, which will continue to conduct ongoing education for listed companies, and new questionnaires on corporate governance are being prepared to collect additional data on companies’ activities to achieve gender balance in management and supervisory bodies and at the level of senior management.

There is one more thing that should not be taken lightly. Investors, Gazić notes, increasingly value the diversity of management bodies as an indicator of the quality of corporate governance and long-term sustainability. Companies that promote diversity are perceived as more innovative, adaptable, and less exposed to reputational risks. Inclusive management teams can make better decisions, better assess risks, and manage them, all of which can lead to more stable long-term results.

Introducing a New Pay System

The Director of Human Resources Management at Podravka Group, Moira Homan, notes that both Podravka and Belupo are ready for the changes brought by the directives, starting in 2023 with the introduction of a new pay system that provides much greater transparency and lays the groundwork for clearer criteria for employee advancement and rewards. To illustrate that this is not just an empty letter on paper: prior to the adoption, more than 150 meetings were held with directors of key units and nine working groups with unions, and about 4000 new employment contracts were drafted and signed. Additionally, 50 workshops were held with more than 3000 workers who were informed about the new pay model, over 200 hours were spent preparing presentations, materials, and calculation examples, and more than 100 individual questions from workers were answered.

– The project of the new pay system included analyzing the current state, preparing and selecting the best model, evaluation, grading and classification of new jobs according to complexity levels and pay grades, job descriptions, creating matrices of all jobs by organizational units, coordination and negotiations with unions, creating a new catalog and systematization, as well as managing changes towards employees and the organization during implementation. The design and introduction of this system took almost two years and resulted in a more modern and transparent system based on the gross contracted salary of employees, replacing the tariff system and coefficients that dated back to 1997. Consequently, with minor adjustments to policies and procedures, Podravka is ready for the new legal framework – stated Homan.

Regarding the disclosure of the pay gap, or gender pay gap, Podravka Group has been publishing this data for years as part of its non-financial report. At the Group level, the pay gap between genders in 2024 was 4.23%, while in Podravka d.d. it was 1.93%, indicating that they have a significantly better average compared to other EU member states.

– In 2024, the share of women in the Management Board of Podravka d.d. was 40%. The share of women at the highest management level in Podravka Group was 43%, and when higher management is added, their share then amounts to 50%. These data already speak of the Group’s commitment to continue promoting equality and gender parity at all levels – they emphasize in the company, adding that the work is not done as managing people requires adjustments to many factors, starting from market, internal EU requirements, and laws.

Systematized by Complexity

– The share of women in the Management Board of Hrvatski Telekom is 29%, and the company is currently led by a woman – states Anamarija Minarski, Director of the Employee Experience and Organizational Culture Department at HT. Additionally, they have four women on the Supervisory Board, one of whom is the chairperson, which are significantly higher shares than the average of listed companies in the Republic of Croatia.

– We are proud that through our processes and continuous investment in a supportive and inclusive organizational culture, we ensure that Hrvatski Telekom is one of the best places for personal growth and career development where everyone has equal opportunities. The result of these investments is equal representation of men and women in development programs and talent programs, equal opportunities for hierarchical advancement that we ensure through a transparent career path process, so women hold many managerial and key high-expert positions – Minarski states, adding that for years the percentage of women in leadership positions at HT has been between 37% and 40%, and after the acquisition of the technology company for building and maintaining physical infrastructure HT services, where due to the nature of the work there are mostly men, the current percentage of women in leadership positions is 34%.

– Gender equality at HT is also visible in the equality of pay that each person receives for equal work regardless of gender, political, ethnic, religious, or any other categories of diversity. We ensure pay transparency by systematizing jobs into categories according to the complexity of the jobs, and the pay range is determined accordingly. In 2024, the unadjusted difference in monthly earnings based on gender in the HT Group was three percent, which was significantly lower than the national average of 11% and the EU average of 13%, with the note that we are systematically working to reduce this difference – emphasizes Minarski.

Revising Acts

Span is ready for the application of the Pay Transparency Directive. It has a job systematization with clear responsibilities for individual jobs, and it has also conducted job evaluations.

– When the Directive is published in national legislation and when it is clear how it will be applied, we will quickly be able to see where we stand – says Tina Balenović, Director of Human Resources at the company.

In response to the Directive on gender balance, Span is revising all internal acts in accordance with positive regulations.

– This is our obligation, but we already meet the standards that prescribe gender equality in terms of opportunities for advancement, learning, and development, regardless of the Directive. The biggest challenge will be to align the sense of fairness among different teams, and as far as management structures are concerned, there is balance. The ratio between male and female members of the Management Board is 50 to 50 percent; we have two female and two male members of the Management Board. It is similar in the Supervisory Board, which has three female and two male members. At management levels below the Management Board, we have 13% women in director positions, 37.9% women in managerial positions, and 27.5% women in team leader positions. Usually, in most companies, the share of women is less represented at higher management levels, but in our case, it is the opposite: at higher management levels, women are more represented compared to lower management levels. This data is particularly important in the context of the fact that Span employs a total of less than one-third women – emphasizes Balenović, adding that IT is still a predominantly male industry, with a global share of women of 20 to 30%; a similar share in Croatia is 39%.

A Million Dollar Question

The Vice President of Human Resources and Culture at Atlantic Group, Mojca Domiter, responds that this group has always nurtured a culture of equality and transparency, so it welcomes the new EU Directive on pay transparency prepared, with already good results and a plan for alignment.

– What is most lacking is clarity of operational implementation, as well as tools that will facilitate this. We are also waiting for the acceptance of regulations in the EU member states where we operate and alignment with them. At this stage, as probably with most employers, we lack concrete interpretations of certain provisions, and it is a question of whether we will have enough time to align with local regulations – notes Domiter.

Regarding gender balance, the company already has an excellent balance in this segment: according to the latest report, that of 2024, the pay gap between men and women in Atlantic Group was 1.09%, while the EU average was 12.7%.

– Overall, we have a balanced ratio of employees in our organization. The ratio of women to men in managerial positions is 53% and 33% in the Management Board, and the composition of the Management Board and Supervisory Board of Atlantic Group is already fully aligned with the recent Directive on gender balance in management and supervisory bodies – states Domiter.

In response to the question of what changes she expects in business culture, management, and processes after the full implementation of the mentioned directives in 2026 and 2027, she replies that it is ‘a million dollar question’.

– On the one hand, it is good to raise awareness of the importance of equality, to talk more openly about the topic of pay, which is still quite a taboo in our areas, and to question whether and how we can be a better employer. On the other hand, we do not expect that the directives will automatically bring radical progress, especially in companies that already have developed processes, procedures, and an established culture of transparency, where one of the inevitable consequences will be an increase in administrative obligations – concludes Mojca Domiter.