I see the same at my workplace. Hell, I think I'm slowly becoming one of those underpaid and underperforming people myself. The reason for this is that if there is no chance of a meaningful improvement in your salary or other benefits, why would you even try? Good old "they pretend to pay me and I pretend to work".

If there is no proper incentive system in place to encourage good performance, those who value money or career development just leave after a while and those who just want an easy life stay and underperform.