The leader of one of Spain's most important labor unions said on Wednesday that the unions would be prepared to accept moderated pay increase as a result of the ongoing crisis, but not a pay-freeze.

Candido Mendez, the leader of the Union General de Trabajadores (UGT), was speaking on radio station Cadena Ser a day before the cabinet of new Prime Minster, Mariano Rajoy announces its second round of measures to combat Spain's economic deficit on Thursday.

Mendez made it clear that the unions understand the economic climate and are willing to co-operate to a certain extent in terms of wage.

"Moderation, but not freezing ... in certain cases, we would accept that the salaries don't grow by as much as at first proposed," said Mendez.

Inflation ended the year 2011 with a rate of 2.4 percent in Spain and that will be the benchmark for most collective pay negotiations in the coming weeks.

Mendez said that the unions would also consider accepting measures to vary the working hours, with the aim of giving small and medium sized companies alternatives to help reduce Spain's unemployment level of over 4.4 million people out of work.

He highlighted that 90 percent of the jobs that have been lost in Spain were concentrated in small businesses, but he added that any alternative arrangements would have to ensure that workers didn't lose unemployment or pension rights.

Though rather conciliatory with the new Popular Party government, Mendez criticized new Prime Minister, Mariano Rajoy for not taking measures to help stimulate the economy, adding that the recently announced cutbacks will merely serve to prolong the crisis into the second half of 2012.