Business applauds, labor criticizes Reagan urban Enterprise Zone plan

Organized labor and business are clashing head-on again in Washington.

This time it's over the Reagan administration's proposal to set up Enterprise Zones in ''decaying communities'' and through financial and regulatory aid there ''create a free-market environment favorable to growth.''

The plan, recently announced by the administration, calls for establishing a maximum of 25 zones over a three-year period. Their purpose would be to encourage new business and industry to move into deteriorating areas with high unemployment.

Labor and business take sharply opposed positions on the program:

* The AFL-CIO has attacked the plan as ''an attempt to pit jobless workers in blighted communities against one another other'' as they bid for jobs in industries with cute-rate wages and substandard conditions.

Moreover, the AFL-CIO says, letting employers who move into the new zones have special tax breaks and exemptions from state and local laws, regulations, ordinances, and codes would undercut employers operating elsewhere who conform to regulations and receive no tax aid. Creating jobs in the depressed areas could eliminate jobs elsewhere.

* Speaking for business and industry, the US Chamber of Commerce supports the administration program as one that could revive inner cities by helping local governments remove obstacles to private enterprise built by excessive taxes and regulations.

The chamber says it believes as the Reagan administration does that there must be incentives for business to move into the decayed parts of communities, if they are to be restored. The program would also apply to some rural areas and Indian reservations.

The Enterprise Zone program is a keystone of President Reagan's economic revival plan. It would be a joint project of the federal government (through tax credits and other aid); of state and local governments (through regulatory relief from zoning, building code, and licensing laws, and through improved services); and of private sector businesses (through new investments).

Legislation now before Congress will establish the criteria for Enterprise Zone eligibility. These will include unemployment above the US average, 9.4 percent in April; concentrations of poverty and low income; and population losses between 1970 and 1980.

Sol C. Chaikin, president of the International Ladies' Garment Workers' Union and an AFL-CIO vice-president, said in New York that such a plan ''just wouldn't work; it would only transfer unemployment outside the zones.'' Instead of new jobs being created, existing jobs would be shifted inside the Enterprise Zones to take advantage of the benefits offered, Mr. Chaikin said.

The US chamber considers the program a good alternative to government subsidies to eliminate poverty and revitalize communities. However, it says, the plan can work only if the private sector becomes involved, and state and local governments agree to play a significant role not only through regulatory relief but by improving conditions for businesses in the zones.

''Major repairs are needed in almost all our cities, such as repairs or improvements to roads, sewers, and water systems, and the provision of adequate facilities for solid-waste disposal,'' the chamber told Congress. ''In addition, improved police and fire services are also important.''

Can the program pass? The administration is confident it can. AFL-CIO's Chaikin says frankly, ''I don't know.'' It could depend, he adds, on unemployment figures. If they continue to move up, he expects members of the Congress will become unpredictable.