By Thorsten Severin and Alexandra Hudson
BERLIN (Reuters) - Germany's Free Democrats, fighting to renew their coalition with Angela Merkel's conservatives in September's election, could face damaging new splits when they thrash out a position on a minimum wage at their weekend congress.
Merkel's Christian Democrats are riding high in the polls yet she needs the Free Democrats (FDP) to consolidate their comeback from the depths of voter distrust if she is to see off the opposition Social Democrats and Greens, who are almost as strong as her center-right bloc.
At the congress in Nuremberg, the pro-business party will settle its manifesto and decide a position on the minimum wage - a debate that cuts to the heart of its liberal values and could provoke a rebellion against party leaders.
Around 5 million workers in Germany - some 16 percent of all employees - earn less than 8.50 euros an hour, which is the minimum wage the center-left opposition wants to see.
The FDP, also known as the Liberals, has long opposed a minimum wage, arguing it smacks of a planned economy and could alienate its traditional business and professional clientele.
But party chairman Philipp Roesler is now arguing for a minimum pay level in sectors or regions where workers are not unionized - similar to Merkel's viewpoint.
With FDP traditionalists such as the party leader in the state of Saxony, Holger Zastrow, arguing it would be unworkable and threaten jobs, there is the risk of the kind of surprise attack on Roesler that has characterized recent congresses.
But having closed ranks and stopped the infighting that has repelled voters since Merkel turned to her traditional coalition partners in 2009, the party seems determined to present a united, electable front.
"We played the clown for three and a half years. Now it is somebody else's turn," a high-ranking FDP party member said.
The chancellor can certainly feel more encouraged now about her chances of continuing with her preferred coalition ally than at the start of the year.
The party took heart from an unexpectedly strong state election result of 9.9 percent in lower Saxony in January, when the polls had indicated it might struggle to breach the 5 percent threshold needed to get a seat in the state assembly.
Today, fighting talk dominates and the FDP is keen to profile itself as a party of fiscal discipline, lower taxes and liberal social values.
"Some in Europe are hoping for a change in government in Berlin, because they don't want to consolidate anymore, and want to get back to spending," FDP Foreign Minister Guido Westerwelle warned in one newspaper, playing on German frustrations that they have to pay to keep euro zone peers afloat.
Nationally, the party is still shown at around 4-6 percent, a dramatic fall from its 14.9 percent in the 2009 election.
However, pollsters say the FDP - dubbed the party of tax advisers and dentists - has an image problem which often means voters are reluctant to declare their support publicly but prove loyal on election day, as happened in Lower Saxony.
(Editing by Alison Williams)