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German Chancellor Angela Merkel greets people during German Unification Day celebrations in Mainz, Germany, October 3, 2017. REUTERS/Kai Pfaffenbach

(reuters_tickers)

By Andreas Rinke

DRESDEN, Germany (Reuters) - The youth wing of German Chancellor Angela Merkel's conservatives said on Friday the bloc had a credibility problem on migration and needed "new faces" after suffering big losses in the Sept. 24 national election.

Merkel won a fourth term in office, but her Christian Democrats (CDU) and their Bavarian sister party saw their worst results since 1949, bleeding support to the far-right Alternative for Germany and the pro-business Free Democrats (FDP).

Merkel, who will address 1,000 delegates from the Young Union (JU) in Dresden on Saturday, will try to hammer out differences with Bavarian party leaders on Sunday about their call for an upper limit to migration.

An agreement is needed before conservatives can enter into talks on a tricky three-way coalition with the FDP and the environmentalist Greens, an alignment untested thus far on a national level.

The young conservatives' "Dresden declaration" called for an "honest and unflinching questioning of our polices of the past years" given the election results.

"Things cannot just continue as they were," the declaration said. "Many people have the feeling that 'those up there' have forgotten 'us down here'."

The declaration said conservatives had a "credibility problem" on the migration issue, but emphasised the group's wish for Merkel's continued leadership.

At the same time, it said conservatives "should have the courage to represent the full spectrum of the party through new faces in government, the parliamentary group and party."

Deputy finance minister Jens Spahn, considered a possible successor to Merkel, drew sustained applause for a speech in which he blamed the government's migration policies for the election losses, and said conservative leaders had refused to acknowledge that fact or address the public's fears head on.

The declaration did not demand an upper limit on migration as the Bavarian Christian Social Union (CSU) has done, but said a clear limit on migration and a quota for refugees were needed.

"What we don't need is uncontrolled immigration into our social welfare systems," it said.

Merkel and the Greens have rejected the call by the CSU for a migrant cap but there are signs that conservatives could agree on different wording.

"I honestly don't care what it's called," Spahn told delegates, adding that conservatives understood that some change was needed. "We got the message," he said.

Some members of Merkel's conservatives and potential coalition partners have called for an immigration law as a way to solve the issue.

A new poll released by Focus magazine showed that 67 percent of Germans back the migrant cap demanded by the CSU, while 26 percent reject such a plan.

(Writing by Andrea Shalal; Editing by Ralph Boulton and)

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