I don't think contracts promote career longevity. If your employees contract is up every year if gives your employee the chance to look for other jobs.
And given my example I think my question was very specific. Deflation will cause you to get over paid for a job over time, making it enticing for an employer to fire you and hire someone else on for a lower price.
I ask again. Why is it that you think that standard of living adjustments can only go in one direction?
You think that deflation will lead to overpayment, but don't believe that inflation leads to underpayment.