You need to do this and do it early. All those years of missed revenue add up quickly.
I'm not European, but I imagine that this isn't the case in Europe as it doesn't have the same culture around work.
For example, while landlords aren't supposed to raise the rent by more than 2% per year, I've had my landlord surprise me with a 5% change, but moving is too expensive to realistically consider [1].
Factor in all the additional costs of living, and if you don't get significant raises every year, you're going to fall further behind each year and be unable to afford a family, a house, or an emergency.
It's not great.
1 - When I moved to a good neighborhood in NYC, I had to pay a brokers fee of 15% + moving costs + up front costs to the landlord. Say my rent was 3k, this would be 5400 (0.15 * 3000 * 12) + ~500 + 9000 (first + last + security), or approximately 15k just to move into a place you don't own.
Rule of thumb for me in my career is I expect at least a 5% raise yearly to account for cost of living and inflation of currency, otherwise, like you said, you'd be losing money YoY.
Thankfully, I've gotten many > 25% raises throughout my career. It's possible, but it's rare, and jumping jobs usually gives larger pay bumps.
My mortgage is less than $2200 for a 3100 square foot house brand new build and that wont go up besides property taxes and insurance.
(Fortunately, this is a good employer that realises what the reality looks like and is willing to offer me competitive raises to make it a doubly mutually beneficial arrangement.)
That being said, I was quite content with my pre-Covid salary which was pretty much average for a top end individual contributor locally. But I did need to make at least $20K more over in two years.
Then Covid happened, along with pay cuts and the local market dried up.
But now working remotely for BigTech means my base salary is a little more than it was pre-Covid and RSUs+Bonus is pure gravy that goes directly to long term savings.
It also meant my wife didn’t have to go back to work in the school system with a Covid going around.
The reality is that software engineering automates software engineering jobs the most. As a result, people in this industry do highlight the importance of not neglecting your skillset.
However, I wouldn't take that as them trying to maximize their revenue. They've simply found that they need to do a deeper analysis on skills to not get automated out of a job.
> All those years of missed revenue add up quickly
I'm only talking about money here
But, if you are working for less than your fair market value, you’re providing the lifestyle that your company’s owners are happy with.
I know someone who applied for a similar role (one level up) at Amazon who lives in MiddleOfNowhere Nebraska and he made about the same as someone who lives in Seattle.