Unfortunately there was a huge gap in what was expected of these people and what they could actually do. Save but a few they were pretty awful employees for the job. Not necessarily their fault, but it's one example of the gamification of the system.
It might be different in Process Chemistry, which is where the best lab work is work. Perhaps those who have the magic in scaling up a reaction into production are like those who can debug anything? I've never worked with those groups or with the Analytical chemists in Development.
Disclaimer: I have a PhD, but never wished to go into academia due to the politics. And yeah, it's a union card.
I don't know which country GGP (or his wife) is from, and you might well be correct about your assessment, but there are some countries where master's degrees are viewed differently than in the U.S.
Where I live and did my degree (Northern Europe), it's commonplace to do a master's rather than just a bachelor's degree. In fact, in many fields the master's used to be considered the basic "undergrad" degree here. A bachelor's degree existed, but in many fields you'd have been considered to have dropped out of completing a master's if you only had bachelor's. That might be slowly changing, with a higher emphasis given to bachelor's level degrees, but the sentiment probably still remains.
And if you think an oversaturated job market pushing people into doing PhD's they don't need for the actual job isn't a problem for "the PhD system" then I call you short sighted.