I think it's bad business practice not to give payrises as inflation is always above 0% so the employees are getting a worse deal for being loyal to the company and for people who take on extra work increasing the companies profitability. This approach of no pay rises basically promotes the why bother putting myself out thoughts. Sort sighted approach that I believe does the company more damage than the money it saves.
There are plenty of examples of companies that are doing very well and compensate their employees very well with reinforces the quote 'look after your employees and they will look after you'.
Sadly this company doesn't seem to think pay rises for employees are important so I expect the company will experience financial challenges until they do!