* Merkel's electoral district votes on Sept. 4
* Mecklenburg-Vorpommern has high jobless rate
* Far-right NPD campaigns to remain in state assembly
STRALSUND, Germany, Aug 29 (Reuters) - One in five people are on social welfare, 14 percent of teenagers drop out of school with no qualifications and unemployment is all but a certainty for many.
In Gruenhufe, part of Chancellor Angela Merkel's constituency in the northeast German state of Mecklenburg-Vorpommern, the shrill slogans of the far right stir more emotion than anything as remote as debate over the euro crisis.
Almost every street lamp bears posters of the National Democratic Party (NPD) in black and red, with slogans such as "Criminal foreigners out!"
"Who asks the people what we want? Nobody. They just do whatever will get them reelected," Thomas Wenk, a 54-year-old former shipyard worker, said in a housing estate in Gruenhufe.
"The other parties play into the NPD's hands by doing nothing for young people. The NPD takes the vacuum left by unemployment and low pay and fills it with slogans."
With nearly 12 percent unemployment -- three times the level of the wealthy south -- and young people leaving the region to find work, Mecklenburg-Vorpommern is fertile ground for the far right, like several other former East German states.
In the historic town centre of Stralsund, the district that Merkel represents in the German parliament which includes Gruenhufe, colourful gabled houses nestle under towering red-brick gothic churches in the bustling Baltic port.
Pride in their MP being the first woman and the first East German to be chancellor ensures Merkel a strong turnout when she returns for a campaign rally before an election on Sept. 4 for the Mecklenburg-Vorpommern state parliament and premier.
But while her speech on the euro and budget discipline get loyal applause from the crowd in the cobbled Old Market, these are not the issues that seem to trouble local people.
"When we ask people 'what do you want from politicians?' they say: We need work, and our children need work," said Heike Carstensen, candidate for the centre-left Social Democrats (SPD) who lead the state's governing coalition with Merkel's Christian Democrats (CDU) but are unlikely to beat the CDU in Stralsund.
Merkel's conservatives have been punished in a series of seven state elections this year and the SPD is threatening to push them out of their partnership in Mecklenburg-Vorpommern, one of Germany's smallest states by population with 1.6 million people.
Another setback would undermine Merkel when her leadership in the euro crisis is being questioned by party barons and the general public, reducing her chances of a third term in 2013.
Some polls see the SPD getting a record 38 percent and the CDU 10 points behind. With the former communist Left Party in line for 17 percent, the SPD threatens to revive the pre-2006 "Red-Red" coalition and snub the CDU.
Merkel told supporters in Stralsund she opposed "governing with people who don't even know if it was right or wrong to build the Wall 50 years ago. That is my message to the Social Democrats", referring to some Left leaders' recent expressions of nostalgia on the recent anniversary of the Berlin Wall.
While Mecklenburg-Vorpommern is known for its attractive coastline, islands and nature reserves, locals like Wenk say the former CDU chancellor Helmut Kohl's promise of a "blossoming landscape" after unification rings hollow for them.
Among the grey and brown blocks of flats in Gruenhufe, with peeling tiles, mouldy balconies and overgrown lawns, men with shaved heads and cigarettes walk fierce-looking dogs. NPD posters are everywhere.
The party got enough votes at the last state election in 2006 to sit in the regional parliament and receive state funding. With an aggressive campaign and vague slogans such as "Honest pay for honest work", polls put the NPD half a point below the 5 percent threshold for a seat in the state assembly in Schwerin.
But, as anti-NPD campaigner Julian Barlen says: "Last time they were also at this level in opinion polls and ended up with 7 percent. It may be that people willing to vote for the NPD don't like to admit it."
FORCES OF DEMOCRACY
At a candidates' debate chaired by the local DGB trade union chief Volker Schulz, only a dozen members of the public turn up because Merkel is speaking in town in an hour. The CDU do not show and the NPD are not invited.
"We have to see how we can ensure the NPD does not get back into parliament," said Shulz. The Left's Karsten Neumann said the massacre in Norway by right-wing extremist Anders Behring Breivik showed how vital it was "to stand up for democracy".
When a group of young men campaigning for the NPD near where Merkel had spoken were asked for comment, they deferred to an unsmiling young man in spectacles and a black shirt.
"We don't give interviews, the press always twists what we say," NPD local councillor Dirk Arendt, aged 35, told Reuters. "You can write if you want that lots of people think like us but they dare not say it because they are afraid."
Afraid of what? "Consequences," he said, walking away.
With foreigners making up only 2.5 percent of the population in the state and less in Stralsund, anti-NPD campaigners say unemployment, poor pay and low educational levels are what help make the far right flourish.
Merkel's candidate for state premier, Lorenz Caffier, said the CDU, which has run the regional economy ministry in the state coalition, has almost halved unemployment.
Careful to take aim at both the far right and far left but also stating his support for a ban on the NPD, Caffier said all democratic parties needed to outflank the NPD's aggressive tactics on core issues like unemployment.
"If the NPD holds 'surgeries' for the unemployed , then the forces of democracy must do the same," he said.
Caffier said the euro crisis was not a campaign issue because "people trust Angela Merkel, this is her constituency and they know she is fighting for the euro and a stable currency".
But the SPD's Carstensen said people were "simply too busy with their own problems, or just resigned. Kohl talked about a blossoming landscape. There is no blossoming landscape".
Carstensen said it would be tough to beat the CDU in Merkel's constituency, where "people say they're proud of the chancellor even though she doesn't come from here and never lived here".
Merkel, who called Stralsund her political "Heimat" (home) twice in her speech, was born in Hamburg in the west in 1954 and brought up in East Germany in Brandbenburg state, nearer Berlin.
Out in Gruenhufe, Wenk bristles at the suggestion he should be proud that the local MP is chancellor of Germany and possibly one of the most powerful woman in the world.
"Why should I be proud of Angela Merkel? She has done nothing concrete for Mecklenburg-Vorpommern, not for me or my family. Nothing that makes me proud of her." (Reporting by Stephen Brown; editing by Elizabeth Piper)