In order to retain people long term they need to up the pay substantially, to a point where the lower cost model becomes unsustainable
That is not really true. Pilot wages are such a small part of the overall costs that even a 20% increase would not kill the business model of LCC.
Total crew costs are between 13-16% of operating costs. Not that significant but management can squeeze so they do. Hard to squeeze fuel sellers and airport fees.