WUPPERTAL, Germany - German Chancellor Gerhard Schroeder's Social Democrats appear to be heading for a potentially devastating defeat in an election in the industrial state of North Rhine-Westphalia on Sunday.
Fourteen months ahead before a general election, Schroeder's party risks losing control of Germany's industrial heartland where it has ruled for 39 years.
The state of 18 million people, the most populous in the country, is set to switch to the conservative Christian Democratic Union (CDU), whose leader Angela Merkel is aiming to unseat Schroeder next year and become Germany's first woman chancellor.
Many observers believe that after a string of poor results in state elections, defeat in North Rhine-Westphalia could hammer one of the last nails into the Social Democratic Party's (SPD) coffin on a federal level.
The environmentalist Greens, who form the so-called 'red-green' coalition with the SPD both in the state and on a federal level, are also struggling.
In the seven years since Schroeder came to power, a majority of Germany's 16 states have switched to the conservatives.
North Rhine-Westphalia accounts for around 1.1 million of Germany's five million jobless and in some of the most blighted areas of the Ruhr valley the unemployment rate tops 30 percent.
Judging by people gathered for an SPD rally in the industrial city of Wuppertal on Wednesday, Schroeder's party has lost the trust of working-class voters, the traditional bedrock of their support.
Labour market reforms introduced in January this year have added to the pain for many.
Else Koch, 83, said she had supported the SPD ever since she was eligible to vote, but this year she would abstain in protest at their policies.
"They take all my money, my pension is poor and I still have to pay for my medicine," she said.
Andre Kaiser, a 41-year-old carer who has been out of work for a year, used to be a member of the SPD but said he had suffered from the party's labour market reforms.
He was thinking of voting for a breakaway left-wing party set up by the former SPD chairman Oskar Lafontaine. "It's a reasonable alternative," he said.
Not surprisingly, the CDU's lead candidate in the state, Juergen Ruettgers, has seized on the jobless issue.
"Red-green is the coalition of mass unemployment," he said on Tuesday during a televised head-to-head debate with the state's leader, Peer Steinbrueck of the SPD.
There are signs however that although the opposition has led the opinion polls for weeks, the SPD may be closing the gap at the last minute.
A poll last week showed the CDU would have polled 44 percent against 35 percent for the SPD if the election had taken place last Sunday.
The Greens would have polled nine percent while the CDU's likely partners, the Free Democratic Party (FDP), would have obtained seven percent.
That meant the combined CDU/FDP lead over the SPD and Greens was cut to seven percentage points, compared to 10 in previous weeks.
In an attempt to win back its traditional territory, the SPD's chairman Franz Muenterfering has launched an attack on 'rampant capitalism', rounding on companies that invest in cheaper labour markets than Germany.
But the Bundesbank on Tuesday said the criticism of the competitive behaviour of companies and investors had "sparked fresh uncertainty" and said the government was sending conflicting signals about its willingness to implement much-needed structural reforms in the eurozone's biggest economy.
05/18/2005 13:54 GMT