That's cuz your numbers are too small. Offer a 50% raise instead of a 20k raise and you will see different results.
> Yes I could quit and get a ~20k raise by shopping my resume around, but I don't need the money
Plenty of stories on Blind of people shopping around and going from 150k TC to 350k TC, so I guess it really depends on your situation.
Also, those highly paid engineers in other companies might be tired of working on surveillance tech but aren't willing to stomach 50% pay cuts because your company is shooting for "market rate" compensation instead of market clearing compensation.
One way is to try switching from a regular industry job to a “giant” such as a FAANG. But these are quite rare in most countries.
Another way would be switching into specific industries like finance - but the high comp there traditionally means giving up some other things such as a guaranteed 40h-or-less workweek. Hard pass from many established engineers.
A third option would be switching to a larger share of non cash comp, but again, equity large bonuses are not commonly part of European comp and comp in traditional industry.