Vulnerability demands attention and, in the past, where profits were prioritised business was preoccupied and vulnerable customers harmed.

Because of Covid 19 we can expect to see more vulnerability with multiple drivers. The pandemic has reminded us that we can all be vulnerable if the right (or wrong) circumstances occur. 

A year ago, your vulnerable customer probably didn’t look like my daughter and her friends:  cashed-up twenty-somethings, single, easy going and living alone. Nor did a dual-income household with primary school-aged kids automatically raise any red flags.  

However, we are now realising the various ways that changes in circumstances can quickly render us vulnerable in both financial and non-financial ways. The physical, emotional and financial impacts of the pandemic challenge business to find new ways to recognise and forecast when people are experiencing hardship. Not least because many people who find themselves in hardship may be less likely to seek support.

We live in a society where wealth is a sign of success – particularly for those who have grown accustomed to a certain level of financial wellbeing. In this context, to be labelled vulnerable is a suggestion that you have failed in some way. There’s an element of shame or even a stigma attached to the label. 

Vulnerability is so often positioned through an economic lens, the term synonymous with poverty, diminished capacity or poor decision-making. This means singles struggling with the mental health impacts of isolation and parents collapsing under the pressure of home-schooling may baulk at the idea of being labelled ‘vulnerable’. 

Our new reality also requires fresh approaches to handling people who have experienced a sudden change in fortune. People who managed just fine in the “gig economy” are now in a precarious position in “insecure employment”. Those who took on huge debts to buy homes in our major cities are also under extreme financial pressure as the economy continues to slide. 

I recently participated in a discussion with customer advocates from the financial services sector. One advocate revealed that estimated calculations were that we can expect around 30,000 homes to be lost as a result of the pandemic. A month ago (which seems an age in COVID-time), the Lowy Institute reported the number of unemployed would soon exceed 1.3 million. The jobless rate will climb to 10 per cent by the end of the year and still be above 8 per cent by the end of 2021, according to the Reserve Bank of Australia (RBA). In short, all evidence points toward an explosion in the amount of vulnerable people businesses are dealing with. 

“Measured as Gross Domestic Product (GDP) per head, Australia’s average living standards are falling and will take several years to return to the pre-pandemic level,” says the institute’s John Edwards, a former member of the Board of the RBA, and Adjunct Professor with the John Curtin Institute of Public Policy at Curtin University. 

Our economy’s health is measured by our GDP. It’s the magic acronym: – the more it goes up, the better off our society is, or so they say. However, given the anticipated explosion of vulnerable customers and people facing financial hardship, it might be worth revisiting the role GDP plays in our understanding of economic health. 

If our GDP recovers, but we see minimal reduction in the amount of vulnerable people – financially vulnerable or otherwise – is this really a recovery at all?

Measuring a society’s health by GPD can be a useful rule of thumb, says business ethicist Dr Ned Dobos, Senior Lecturer in International and Political Studies at the UNSW Canberra. However, it would be “wrong-headed” to put too much faith in it, Dobos argues that we need different metrics than relative material wealth to measure how we are going. 

Dobos points to the research conducted by Daniel Kahneman and Angus Deaton, showing that more money will only make people happier up to a certain point – around $US75,000. But while extra money may make them feel more successful, it will not make them feel happier beyond that threshold. 

“We’re continuing to measure the welfare of our society in terms of GDP, even though GDP has no proven connection to our sense of wellbeing anymore,” he says. 

“We have fetishised material wealth, even though it’s not connected to the things that ultimately matter.” 

Dobos hopes that a silver lining from the pandemic will be that, as a community, we have more understanding of people who are unemployed and that we realise that poverty is not a character defect. 

“Surely people, after a period of time, would have to appreciate that with a million people in this country unemployed, [unemployment] must be something that is not entirely within their control,” he says. “We can’t have that many degenerates.” 

Susan Dodds, Professor of Philosophy at La Trobe University, agrees. She says she would like to see a recognition that attaining wealth requires a fair degree of luck, rather than it being something one “deserved”. 

She would prefer the discussion of economics shift from GDP to “talking about what makes for a decent life.”  

There are large numbers of people who are working as casual, low-paid, low-skilled, itinerant workers – moving between nursing homes. There’s a reason for that: they’re not doing it because: ‘gee whiz, I’d love the flexibility’,” says Dodds. 

Dodds says the pandemic is an opportunity to have another look at what a reasonable expectation of profit is. “The idea that we can get, year-on-year, a two per cent reduction in our costs in order to get an inflationary increase in our profits, making me comfortable with the amount of dividend I get, is really exploitative.” 

What gets measured gets done. If our recovery is determined exclusively in terms of GDP, it might mean creating more vulnerable people, as organisations are incentivised to pursue relentless growth.  

There has been a global push for more purposeful capitalism; Blackrock CEO Larry Fink wrote a letter to 500 CEOs last year addressing this issue. Closer to home, this year New Zealand is the first western country to design its entire budget based on wellbeing priorities. “We’re embedding that notion of making decisions that aren’t just about growth for growth’s sake, but how are our people faring?” Ardern said.  

The ACT has identified that economic conditions, important as they may be, are not the only factors that contribute to the quality of life of Canberrans. In releasing the Budget in March 2020, the ACT Chief Minister Andrew Barr stated, “We are more than an economy – we are an inclusive, vibrant and caring community where we aim for everyone to share in the benefits of a good life both now and in the future.” The ACT Wellbeing Framework will inform Government priorities, policies, investment decisions and Budget priorities. 

In his recent Ted Evans lecture, economist Professor Ian Harper, an RBA board member, reminded economists to talk to the public, to keep in touch with what the community thinks are important priorities.

“Apart from anything else, you learn so much about what really matters for people. Whether it’s the level of minimum wages, a level of interest rates, how banks are supervised, where you can open a pharmacy, when you can open a supermarket or where you can get treated for infectious disease,” says Harpers. 

“No one should be surprised that an economist should worry about the human dimension of his craft – social science, it may be, but economics started out as moral philosophy.”  

“Our quest to raise community welfare cannot be divorced from its foundation in a moral calculus. More to the point, if it is divorced from its moral foundations, then economic policymaking is more likely to diminish than enhance economic welfare.”