Not sure if I understand your situation. You're both not happy with your salary and you won't be able to get a job in another company that pays better.
I would be pretty happy if I were in your situation.
A raise of 1.5% is basically a pay cut over last year. Sure he may be getting overpaid compared to competitive salaries, but they offered him a certain amount of money last year. This year they're basically paying him less than they did last year.
It's completely possible to be overpaid and also unhappy with your salary. Inflation exists, and nothing is immune from it. A pay cut is still a pay cut.
Hm, you're right. I hadn't realized inflation was so low last year.
I stand corrected, but I think the (corrected) statement holds true. Maybe not for this particular case, but if you get a raise that's less than inflation (or no raise at all), you're taking a pay cut and have every right to be upset.
I would be pretty happy if I were in your situation.