Defeat of Bill Deals Blow to Prospects for Labor Reform : Unions: This week’s Senate vote on proposed striker replacement legislation is seen as forcing a change in tactics.

Prospects for sweeping labor law reforms envisioned by the Clinton Administration and organized labor were badly damaged by this week’s defeat of a bill intended to ban companies from firing and permanently replacing strikers, many business and labor observers say.

To hold any serious chance of passage, future labor law proposals backed by unions and the Administration will need to be moderated to satisfy conservatives, the observers say.

Several factors figure in their reasoning. First, if a bill as dear to union members as the striker replacement bill failed, other major labor-backed legislation with less emotional and widespread appeal would also stand to lose.

Also, pro-business Republicans are expected to gain seats in Congress in this fall’s elections, presenting further obstacles for future labor-supported bills.

If unions and their Democratic allies couldn’t win on labor law reform this year, “they certainly can’t do it next year,� said Bradley J. Cameron, a spokesman for the Labor Policy Assn., a group representing big corporations.

The Administration in 1995 is due to push for changes in labor laws that have governed relations between unions and management since the 1930s. To start the process, President Clinton named a panel to suggest ways to modernize labor laws and make U.S. employers more competitive globally.

Headed by former Labor Secretary John T. Dunlop and including many other members friendly to organized labor, the Dunlop Commission issued a preliminary report last month that generally was well-received by labor and management. It decried such things as the growing gap between high-wage and low-wage workers, along with the rising number of lawsuits stemming from employment disputes.

The panel’s work is expected to face more controversy, however, when it proposes specific legislative reforms in a report due after the November elections. Particularly sensitive is the expected review of the laws and employment practices that, labor officials say, have made it more difficult for unions to organize workers.

If the commission recommends legislation that “corresponds with organized labor’s wish list, it’s not going to go anywhere,� said Jeffrey A. Joseph, vice president for domestic policy at the U.S. Chamber of Commerce.

Prospects also appear dim for a labor-backed bill in the Senate to overhaul the Occupational Safety and Health Administration. Such legislation is taking a back seat to health care reform, which “will eat up most of the calendar this year,� said David M. Saltz, a spokesman for the AFL-CIO in Washington.

But Saltz, clearly disappointed by the failure of the striker replacement bill to overcome a filibuster in Senate votes on both Tuesday and Wednesday, wasn’t willing to concede defeat on labor’s legislative agenda. He argued that there is even a chance to revive the striker replacement bill this year if Democratic senators succeed in attaching the proposal to legislation supported by Republicans.

Saltz also contended that some senators who opposed the striker replacement bills were locked into their positions because of previous public statements on the issue and that they might show more flexibility on other labor-backed legislation.

“Each issue has a life and dynamic of its own,� he said.

One option for the Dunlop Commission or the Clinton Administration, Cameron said, might be to sidestep some of the controversial issues concerning union rights and focus instead on other ways to enhance labor-management cooperation and employment-related litigation.