Compensation packages for new recruits on Wall Street could drop by as much as 20% this year, according to a recruiting firm survey.

A survey of leading recruiters released today by the smart cube, a global firm specializing in customized business research and analysis, reports that recruiters are in virtually unanimous agreement that compensation for new Wall Street hires will decline, although there is some disagreement as to the extent of the downturn.

More than 40% of recruiters surveyed expect compensation will decline by as much as 20%, while 22% expect the decline to range between 11% and 16%. About one-fifth of the survey’s respondents were less pessimistic, predicting a decline of less than 10%.

It notes that some recruiters say that an increasing number of Wall Street firms are significantly cutting signing bonuses and some are eliminating them altogether. Recruiters also say the hiring process is taking considerably longer and there is a discernible trend among Wall Street firms to hire employees on a temporary or contract basis.

Respondents in the UK painted a grimmer compensation picture, it reports, noting that 50% of respondents expect compensation decreases of at least 16%, however half of those predict a slide in compensation over 20%.

“There is almost a unanimous feeling that the US and UK financial sector is seeking a lower cost and more flexible workforce in the wake of the sub-prime crisis,” said Omer Abdullah, the smart cube managing director who oversaw the survey. “In addition to imposing layoffs, investment banks will only recruit new employees in areas where there are critical openings that absolutely need to be filled. With Wall Street unemployment steadily rising, the job market pendulum has clearly shifted in favor of employers.”

Among the other findings of the smart cube survey: most recruiters say the Wall Street job market was more adversely impacted by the collapse of the dot.com bubble than the current sub-prime mortgage crisis; job candidates, particularly at the more senior level, have significantly scaled back their compensation demands and are considerably more cautious about making them; and, employees with secure jobs are considerably less receptive to accepting new positions elsewhere.