Democrat John Street got to walk in the Labor Day parade yesterday and received a polite, but far from enthusiastic response, from a small crowd of union members.

Republican Sam Katz wasn't invited to the parade, but he'll be fighting Street for labor support in November. One tool will be Katz's vision of labor-management cooperation, a proposal unveiled yesterday complete with interest-based bargaining and bonuses for good employee ideas.

The 1999 political reality is that neither Street nor Katz has so far generated intense, enthusiastic labor support. There are reasons.

As Mayor Rendell's key ally, Street was intimately involved in the tough labor contracts negotiated in 1992, and he generally supported the Rendell administration's $162 million in savings from 37 privatization initiatives during Rendell's first term.

Katz is a Republican and it's simply assumed that he has no chance of getting endorsements from organized labor or very much support from union voters.

But on the day traditionally thought to usher in the beginning of the fall political campaign, the Katz camp, which has been actively campaigning all summer, trotted out a 13-page proposal on labor-management cooperation that pledged a partnership with municipal labor unions. It had the look and feel of a substantial olive branch.

"My goal is to first cooperate with and engage city employees in buying into the goal of tax reduction as a way to stem the loss of population and business," Katz said.

He said he's convinced that city employees have plenty of cost-reducing ways of doing business, and he wants to take a union-supported proposal in the current contract, the so-called redesigning government initiative, and make it a centerpiece of the Katz administration.

Ray Jones, a spokesman for the Street campaign, said Street is the only candidate who has negotiated with unions.

As for Katz, Jones said, his press conference "was a veiled attempt to get away from a history that goes back to 1991 of calling for privatization of city jobs."

Meanwhile, Street told Labor Day marchers that he plans to be the mayor who represents "the interests of the poor, the working class interests."

"Labor has been very integral in bringing this city back from the brink of financial disaster," he said.

But Pete Matthews, president of AFSCME District Council 33, who also was at the festivities, complained about the 1992 contracts, which he didn't support.

"We will not be taken for granted this time," he said. "We will fight and do whatever we have to do to get fairness in the next contract."

Echoing his long-standing fiscal conservatism, Street said city workers are indeed entitled to a fair contract, "but we also have to make sure that we don't spend money we don't have that could create a problem in this city."

Saying fairness is in the eyes of the beholder, Katz said privatization remains on the table, though it will remain a last resort. And if it comes, city workers will "be given the opportunity to shift to another department."

In mid-August, Street said in a statement that municipal employees should continue to handle "core services," while other services could be contracted out in some circumstances.

Katz said he expects "tough negotiations" next year with the city unions, "But my style of negotiating will not be to create public scapegoats or lay the blame for the city's problems on the doorsteps of any group."

Too often, Katz said, city government told employees to leave their brains at the door when they came to work.

"One of the solutions to the city's problems is to deliver services more effectively and more responsibly and rely on the people who know how to do it and not assume they don't know how to do it. That's what this initiative is all about," Katz said.