German Chancellor Gerhard Schröder described the defeat on Sunday in the one-time Social Democratic bastion as a painful one, but says he remains committed to his course of reforms aimed at getting Germany's economy up and running again. But judging from recent comments from both Social Democratic Party (SPD) and business leaders following the rout in Hamburg, the headache could just be beginning for the chancellor.

"The situation is very serious, he's stuck in his reform whirlpool and he has to do something," Karl-Rudolf Korte, political scientist at the University of Duisburg-Essen, told DW-WORLD.

Hamburg voters punished Schröder's Social Democrats (SPD) for his unpopular program of economic welfare cuts and social and labor market reforms, known as Agenda 2010, by handing the opposition Christian Democrats (CDU) an absolute majority in the northern port city. It was an inauspicious beginning to a year lined with 13 other elections that are widely expected to be referendums on Schröder's government.

Despite the warning from voters, Schröder insisted on Monday that he will continue to follow the path of reform, "because there is no other sensible alternative." Several leading figures in the SPD echoed those statements.

Economics Minister Wolfgang Clement told daily Berliner Zeitung that the SPD had a difficult path before it. "We knew that, and we have to stick it out," he said. "It must be clear that wavering and wobbling will not help the SPD."

At a party conference on Monday in Berlin's City Hall, Franz Müntefering, the designated party chairman, compared the work of the SPD to that of Sisyphus, the figure from Greek mythology who was condemned to roll a huge stone up a hill in Hades for eternity only to have it roll down again on nearing the top. Still, Münterfering told the party members gathered, Sisyphus always pushed the stone to the top again.

But the Hamburg defeat has unsettled many party members, who may in theory agree that the reform course must go forward, but who are worried that the health of the party will be sacrificed in the process. They fear party leaders are losing touch with the SPD grassroots, who feel the party's principles are being discarded for the sake of reform, according to political scientist Korte.

Unions want a change of course

On Monday evening, Michael Sommer (photo), head of the German Trade Union Federation (DGB), and other union leaders met with Schröder and renewed their criticism of the reform course, calling them "poison for business and the labor market" and socially unfair.

Sommer urged the chancellor to roll back new regulations for the long-term unemployed and introduce a fine for companies who do not make traineeships available.

"The chancellor made it clear that he doesn't see an alternative to his policies," Walter Haas, DGB head in North Rhine-Westphalia, told German radio. "And we made it clear where we're of the opinion that our requests for change must urgently be implemented."

The deputy head of the Verdi services union, Margret Mönig-Raana, said the government wasn't getting the message that the reforms were alienating voters.

"I don't know how many elections are going to have to be lost, before it dawns [on this government]," she said.

The left-wing of the SPD renewed its own criticism about the need for a course correction. The SPD head in North Rhine-Westphalia, Harald Schartau, said the party leadership had failed to communicate with voters about what the reforms were all about, and left them with the impression that only painful change stood on the horizon.

"The perspective behind all these changes has not been made clear," he said.

Rock and a hard place

Schröder finds himself stuck between continuing with reforms, which have been widely welcomed by economists and German business leaders, and risk alienating his own party and losing popular support.

Political analyst Korte told DW-WORLD that the reform process would likely keep moving forward, though possibly at reduced speed.

"Short term, he's got to do something about the pressure he's feeling from party members," Korte said, such as changing the pace of reforms and making some symbolic concessions to the unions and the left wing. "But the basic nature of the reforms, that will remain the same."