You do have a very good point. We have definately considered using salary increases in order to retain and attract good teachers. However, it becomes difficult. We would rather use those raises to motivate teachers to be great teachers, and to reward those that are. Hopefully, this would motivate our drunken hippie teachers ( that we didn't anticipate to be drunken hippies before they arrived... and some of which only became drunken hippies after they met all the other drunken hippies in this city...) to become better teachers as well. But then, every situation is different.

Say have an excellent teacher teaching older students and is getting excellent reports of doing a great job, so you give them a much deserved raise.
You also have a teacher teaching very young students, who don't understand a whole lot of the language yet and are basically too young and undisciplined to be in a classroom to begin with. That teacher looks very bad in comparison to Teacher A ( above ).
You give the raise to Teacher A and not to Teacher B and Teacher B storms into the office threatening to contact their embassy.

You give the raise to both teachers, recognizing that they are both doing a great job despite their different obstacles and either a) Teacher B is angry that Teacher A gets the same raise but has a much easier time or b) Teacher C who is just a mediocre teacher that didn't get a raise storms in threatening to contact their embassy.

You end up implementing "time based incentives" such as 6 month bonuses, a raise every 4 months or so on, and you are back to the same problem of the great teachers and the shitty teachers making the same amount, and they're still angry about it.

It makes me want to run for the hills... if they weren't full of snakes and tigers.