It doesn't sound like a union company to me.
There's really nothing you can do about it. Even in a larger corporation, there are always favorites who get the promotions and raises. In small businesses it's usually a friend or a relative. Plus secrets aren't well kept in smaller companies. Raises and salaries aren't general knowledge in large corporations.
Even if laws are broken, you're not going to get anywhere at this particular company by blowing the whistle. You're not going to be happily keeping your job. If you're not the first to be laid off, you'll definitely be the last considered for a promotion if you try the legal route.
IMHO, you have two choices: seek other employment or stay. If you stay, it's important to not let it get you down. Don't allow yourself to get drawn into the office gossip. Don't surround yourself with the complainers. Hearing negativity will only make you miserable about your job. Focus on the positive reasons you choose to stay.
