I prefer if we want to see healthy competition among peers we should give them a hike based on their work experience. The salary hike according to education is ambiguous because they all have the same qualification level requirements for the job. There are many reasons behind the choice that I would have made.

To embark with, an experienced guy knows the technical aspects of the job. It is truly said that "a new broom sweeps clean but old broom knows the corner." The proficient employee is one who is well versed with the hard-faced problems. For instance, if one person spent a couple of years in the company will perform better than highly qualified fresher.

Secondly, the hierarchy made on the basis of experience will not create disputes among people. The more educated commuters have the knowledge but they don't know about the practicality behind the particular work situation.   

Finally, no education is helpful until you know the implementation in a real working environment. The educated person always need a helping hand therefore there is a need for an experienced person. If we paid experienced person a good amount then he would loyal to the company and always help flourishing blooms in the work culture.
To conclude, a proficient person will be an important asset for the company who can be utilized for learning and gaining some valuable knowledge.