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I am trying to understand the difference between Unit Cost and Salary.

I receive a MSC Fellowship and the different types of allowance on the surface appear like a good salary. All numbers combined they should add up to 66-76k per year. However, this is nowhere near what I actually receive as my salary (which is much lower ~30%).

There are two questions here:

  1. The discrepancy between unit cost and salary has been explained to me comes from social security contributions – including health insurance, accident insurance and severance pay. However I still pay all of these things from my low salary? It feels like I am paying this cost twice.

  2. I understood that the mobility allowance will be paid in full to me. Again More than 30% have already been deducted before tax. Where does that money go?

What can you ACTUALLY expect as a gross salary from the MSC? Without hidden fees and shell game tricks?

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  • This is in Italy
    – Kai
    Jun 27 at 9:48
  • I added italy tag to the question.
    – Nobody
    Jun 27 at 9:50
  • Please spell out acronyms the first time you use them. And if you're talking about specific fellowships post a link to the actual regulations.
    – user2705196
    Jun 27 at 13:42
  • I'd suggest you talk to the person at your university or fellowship body who explained this to you and have them clarify the things that don't make sense to you. They should be able to explain exactly what is going on.
    – user2705196
    Jun 27 at 13:43
  • Mobility allowance: maybe this money are allocated for your trips to conferences/visiting periods et simila. This was the case with some Marie Curie grants. It was a lot of money (up to 30% of the total fellowship). It will be paid in full to you if you spend it, i.e. you are expected to travel, to pay travel expenses and then get them reimbursed. Is it removed from your total scholarship (do you mean this with "deducted before tax")? From your scolarship of 100, you have 30 reserved for travelling (+obscure uni overhead),on the 70 remaining you pay all sort of social contributions&taxes.
    – EarlGrey
    Jun 27 at 14:04

2 Answers 2

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It looks like you've run into a common surprise for first-time grant holders. In many countries employers have to pay a significant contribution to pension funds, social security, national insurance, or similar programs, based on employee salary. On a normal salary statement you don't usually see this, since by convention employee salary is specified net of these employer contributions.

However, when universities fund research, these contributions are also claimed as part of the grant budget. Different funders specify that in different ways.

In the case of MSC fellowships, a fixed total gross employment cost is specified inclusive of both employee and employer taxes. The university then takes the employer contributions (pensions, national insurance) off that total. This reduced amount is then paid to the funding recipient as their salary, who then pays their personal taxes out of it. That does look like you're personally being taxed twice, but it is two distinct taxes, one of which is usually hidden from the employee.

I am not Italian so cannot comment for sure, but a quick Google suggests this is what's happening here - Italian employer tax contributions look to be 30-35% of gross salary, in the ballpark of the reduction you're seeing. So, although it's disappointing, that sounds like a reasonable deduction, and not some trickery by the university.

(Note: This is not the same thing as 'overheads' which go into other university funds and which can be used for purposes outside your direct salary costs. That's a separate heading for MSC fellowships, and none of your salary should be going towards that.)

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  • This is the likely explanation. This happens in exactly this way in Germany and probably also similarly in Italy and various other European countries.
    – quarague
    Jun 27 at 13:15
  • Thank you! I think this is what happens and your numbers match very well. This is really dissappointing to be honest.
    – Kai
    Jun 28 at 14:25
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I am not a lawyer and this is not a legal advice.

It is impossible to answer your question exactly without looking at the documents you refer to and also precise laws in your country.

However, generally speaking, funding documents explain how much money the funding body gives to the University. The University spends the money as follows:

  1. It pays your salary
  2. It pays the employers (theirs) contribution to taxes, social security, etc. Depending on your country and salary, this can be quite high (~30% of salary). I am not sure if this applies to Italy.
  3. It may also keep some money as "overheads", to cover the costs of maintaining buildings, labs, etc. Depending on your University, this can be quite high (for example in the UK, ~50%+ of all funding goes to the University)
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  • Thank you for the response. I am familiar that a lot of the money is assigned to the overhead. However, there is no transparency in the allocation of the money. I have x amount of money allocated to unit cost. What happened with the other money is not communicated with me and I want to understand where this money goes.
    – Kai
    Jun 27 at 10:11
  • @Kai It is not uncommon for University budgets to lack transparency. Some may say they don't want academics to know how much of their hard won funding are held under various budget codes and obscure rubrics and spent on fancy buildings and promotion activities rather than actual research.
    – Dmitry Savostyanov
    Jun 27 at 10:21
  • Thanks. Your comment describes exactly how I perceive this.
    – Kai
    Jun 27 at 10:47

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