But it is a reason to leave the company because you can easily get 10% or more switching jobs.

>occasional hiring and training costs.

Hiring and training costs are enormous, and they aren't occasional when you're talking about software companies with very high turnover. If you're incentivizing job hopping every few years, the average programmer at your company could be spending 25% or more of their tenure ramping up to full capacity.

Only if you have people who crave stability more than they need/want more compensation or who are invested in the work with you (i.e. they find it _really_ interesting). Otherwise it just creates churn, as people need to leave to get much of a bump up and leave the next place next time they want a bump up too.

So it only works overall if most people are in the "wanting stability" group.

This is probably part of the driver towards contract work rather than perm: if you need to switch jobs regularly to keep improving your conditions, then why not have the extra flexibility and/or extra compensation of working contract?