Less experienced colleague now out earning me

This is what pissed me off about employers - why is it always a knee jerk to someone handing in a resignation.

Paying for good staff should be automatic - especially retention

regarding the OP - grow a pair and demand to know whats going on. Get them to tell you why the other person got a raise.

Anyway either way you are not valued there that is clear - If I was you I would find a better job and leave . whats done is done

For most businesses labour costs make up the highest proportion of outgoings, unless income increases, giving automatic pay rises reduces profits, so it doesn’t take much business acumen to see why employers don’t automatically give pay rises to everyone. You could argue that by not increasing everyone’s wage automatically, you risk losing good employees, which is a fair assumption, but in this case it appears they gave a wage increase to the employee they want to keep, the same may or may not be true for the op.

I used to work with a colleague who was earning €20K less than what I was on several years before in a different company in the same job. He was happy in the job and took the pay increases as they came. I tried to get him to look around as he was on lower than what should have been easily available elsewhere. He was comfortable, and the company knew it. He did a good job and took what was offered so why would the company offer more. It's not personal. They want to get their resource as cheap as possible.

For me, I have changed jobs a few times over the last 10 years and I'm earning double (well a little bit more than double) what I was on in 2012. If I'd stayed with the company I'd probably have gotten the 2% or 3% raise each year. It's much easier to get a 10% or 20% bump when moving to a different company.

I've been upskilling as well and moving the career along but if I'd stayed in the same place I know what my wages would be (as I know some of the guys still there).

So fair play to your colleague. He's doing what he can for himself. That's what you need to do too.

Because a pay rise is a known and permanent increase in labour costs going forward, whereas the risk that an employee might decide they are underpaid and leave for a better offer is just that, a risk. It might happen, or said employee might be like the OP and be content with carrying on at their current salary for years. If the latter is the case, then giving that employee a raise would be a waste of money and cut into your profits for no reason.

As soon as that risk becomes a certainty and a key employee actually has a better offer in hand, well, that changes the equation entirely; now it actually might be worth that extra labour costs to keep that employee on board.

Now, this is purely from a business perspective (and a rather shortsighted one at that), not an ethical perspective, of course. It would certainly be more "fair" to give your good employees decent pay rises and keep their pay at or above market levels. However, capitalism doesn't run on "fair"; it runs on keeping costs as low as possible and revenues as high as possible to maximise short-term profit growth. If the bean-counters have calculated that keeping salaries low is more likely to improve said profits in the short term despite a higher risk of employee turnover, then that's what most businesses will do.