* Conservative minister rejects calls for immigration
* Immigration row awkward timing as Wulff in Turkey (Adds minister reaction in paras 14-15)
By Erik Kirschbaum
BERLIN, Oct 19 (Reuters) - Chancellor Angela Merkel's criticism that multiculturalism has failed in Germany sparked a government row on Tuesday over whether the country should take in more skilled immigrants that industry says it needs urgently.
Interior Minister Thomas de Maiziere dismissed calls from three other cabinet ministers who had argued that Germany should relax its rules on immigrants because the country is facing a worsening shortage of skilled labour as its population shrinks.
"Everyone comes up with proposals without understanding the situation -- the existing laws are flexible enough," said de Maiziere, a leading conservative voice in Merkel's Christian Democrats (CDU), referring to demands from other ministers.
"Employers who need skilled workers should go out in the world and recruit them -- and then we'll help them with the immigration. The other way around won't work."
The row comes at an awkward time for German head of state Christian Wulff, on a five-day state visit to Turkey. Wulff, the first German president to visit Turkey in a decade, has urged his country to accept Muslims as an integral part of society.
There are about four million Muslims in Germany, a country of 82 million. Most of the Muslims are from Turkey.
Wulff's comments added further fuel to a national debate about immigration and integration that has been raging since a former central banker, Thilo Sarrazin, published a book taking a critical look at Turkish and Arabic immigrants.
Sarrazin was at first condemned for stirring racism but, after opinion polls showed an overwhelming majority of Germans backed his views, some conservative leaders in Merkel's Christian Democrats began taking a harder line on immigration.
Merkel long tried to accommodate both sides of the debate, talking tough on integration but also telling Germans that they must accept mosques have become part of their landscape. After her support plunged, Merkel appeared to shift to the right.
"This (multicultural) approach has failed, utterly failed," Merkel told a party rally at the weekend.
SKILLS SHORTAGE
The opposition Social Democrats, Greens and the Left party have all criticised conservatives who have spoken out against immigration, an issue which has led to a split within the ruling coalition.
Economy Minister Rainer Bruederle, a leader of the Free Democrats coalition partners, along with CDU ministers Ursula von der Leyen (Labour) and Annette Schavan (Education), have spoken out in favour of relaxing rules for foreign workers.
The German Chamber of Industry and Commerce (DIHK) says Germany lacks about 400,000 skilled workers.
Bruederle said Germany should introduce a points-based system of immigration that would allow skilled workers into the country to alleviate the shortage. Von der Leyen has raised the idea of lowering barriers to entry for some foreign workers.
Schavan said Germany could tap a pool of 300,000 foreigners -- who are unable to practise their professions because their credentials are not recognised -- by relaxing those rules.
"It's time to show that Germany is an attractive country (for immigrants)," she told the Foreign Press Association (VAP). "There's a lot of change going on right now. I'd urge that we avoid dissent and work together on our common goals."
German industry leaders say the labour shortage is acute.
"We urgently need a plan to get the best and the brightest," said Anton Boerner, president of the BGA German Foreign Trade Association. "Germany needs immigrants, more now than in the past. Immigration is vital to maintaining our prosperity." (Editing by Jon Boyle)