Unless market conditions rebound soon, 'it's going to be an old-fashioned terrible compensation year', said Mr Alan Johnson, whose Johnson Associates advises Wall Street banks on pay and bonuses.

Mr Johnson said he expects 2008 bonuses to fall 30 per cent from 2007 levels, which at most banks were down from 2006. Annual bonuses track revenue, which is expected to plunge from levels seen in the boom years.

That's even if Wall Street employees still have a job. United States brokers have fired more than 30,000 workers in the past year as broken-down markets for buyout financing, mortgages and other debt generate severe losses and sap revenue.

And more job cuts are expected, as the credit storm over Wall Street grows worse, as evidenced by the near-collapse of Bear Stearns last week and troubles at a number of investment funds.

'It will be one of the worst years in a long time,' said recruiter Joseph McCann of JH McCann. 'Last year was tough and 2008 should be even tougher.'

Flagging revenue is increasing pressure on firms to cut payroll. Mr Johnson predicts banks on average will slash headcount by 15 per cent this year from 2007, while other headhunters warn of 20 per cent cuts.

On Monday, New York City's independent budget office predicted 20,000 financial services jobs in the area would be lost over the next two years. US securities industry employment peaked at 849,900 in August, government data shows.

Those cuts would follow significant reductions in the first two months of this year: US financial services companies cut more than 20,000 jobs, Challenger, Gray and Christmas said.

'A lot of people are going to be let go,' Mr Johnson said.

'It's going to be really tough. You have a normal cyclical downturn and then put a credit crunch on top of that.'

In the past month, Lehman Brothers laid off 5 per cent of its employees, or 1,400 people, while Citigroup said it would cut 2,000 banking and trading jobs. In January, Goldman fired about 5 per cent of its global work force, or 1,500 people.

Bear Stearns alone could flood the unemployment rolls, as JPMorgan is expected to slash a third or even one-half of the smaller bank's 14,000 employees following its takeover.

Meanwhile first-quarter results, reported last week, fell by half at Goldman, Morgan and Lehman, reflecting losses on assets as well as a slowdown in investment banking. The outlook for the rest of the year offers little sign for encouragement, as analysts slash profit forecasts.

Bonuses, meanwhile, will include a higher portion of restricted stock and awards linked to improved results three to five years out. These measures let banks defer cash expenses in hopes revenue growth picks up.

Mr McCann noted firms are tying up bankers with long-term stock grants that require staffers to remain for five years.

Banks are also dispersing cash linked to a note; if people quit before a certain period they have to pay the money back.

Bankers and traders, of course, will feel pressure to agree to these terms as the job market gets tougher.

'With all these people being fired, it just drives bonuses down,' Mr McCann said.

Some headhunters contend that Wall Street firms have been restrained with their cuts, concentrating on mortgage and corporate lending or trimming at edges. Banks, recalling the drastic cuts after the tech bubble burst in 2000, are wary of cutting too deeply and missing out on the next recovery.

Yet Mr Johnson said banks cannot avoid cutting core advisory, investment and trading jobs much longer.

'You've got the cyclical downturn. That's going to have an impact on M&A, investment banking, hedge funds, private equity and asset management,' he said.

Wall Street's credit losses are far from over, too. Goldman analysts on Monday forecast financial institution worldwide have written off US$175 billion (S$242 billion) since the credit crisis began, out of what they predict could be US$460 billion of losses.

That said, Wall Street's pain could lead to gains for hedge funds, restructuring advisers and investment firms springing up to take advantage of the large labour supply in these distressed markets. These businesses have been aggressive recruiters in recent months.

'For some of these guys, this is their day in the sun,' Mr Johnson said. -- REUTERS