Your reward is not commensurate with the opportunity cost of improving your output. It gets worse with larger companies.
I don't know any system (other than perhaps a carefully planned and unusually benevolent and well-funded central economy) that rewards people for the opportunity cost of increasing their skills, as opposed to the increased output gained from using their skills - one advantage of this system is that it's very clear that if I use my skills more efficiently or in a way that helps the company, a portion of that reward will go to me whether or not I can prove it to management. If I save my current traditionally-capitalist employer $1M/year due to cleverness, I'd expect to see $0.00 of that. I'm far more incentivized to get good at writing self-reviews that portray the things I'm already good at in a good light than to learn the skills to, say, optimize our AWS spend.
That's very different from a system where the government sets pay scales for the entire country, and an individual's efforts cannot make a meaningful change in their own earnings. In the system described in the article, it can.