COLLECTIVE BARGAINING AND LABOR UNION STRENGTH HAVE GIVEN RISE TO TWO SERIOUS CHALLENGES FACING PRIVATE ENTERPRISE, INFLATION AND INTERFERENCE WITH MANAGERIAL AUTHORITY. IN RECENT YEARS, THE COST OF LIVING HAS AVERAGED AN INCREASE OF FOUR PERCENT PER YEAR WHILE LABOR COSTS HAVE ACHIEVED AN ANNUAL RATE OF INCREASE OF OVER SIX PERCENT. AT THE SAME TIME, AS LABOR UNION LEADERS HAVE PRESSED FOR A GREATER VOICE ON MATTERS INVOLVING THE FUNCTIONS OF MANAGEMENT, MANAGEMENT'S DOMAIN OF CONTROL HAS STEADILY DIMINISHED. THE "RESERVED RIGHTS DOCTRINE," WHICH MAINTAINS THAT ALL OF MANAGEMENT'S RIGHTS NOT LIMITED BY TERMS OF A LABOR AGREEMENT REMAIN WITH MANAGEMENT, IS INTERPRETED DIFFERENTLY BY LABOR AND MANAGEMENT. THE NATIONAL LABOR RELATIONS BOARD (NLRB) HAS PROMOTED CONTINUOUS BARGAINING, WHICH, IN EFFECT, REPUDIATES THE RESERVED RIGHTS DOCTRINE. THE NLRB'S REQUISITE FOR AN OPEN MIND ON THE PART OF MANAGEMENT APPLIES APPROPRIATELY TO ISSUES AFFECTING LABOR RELATIONS BUT NOT TO MAJOR DECISIONS WITHIN THE PROVINCE OF MANAGEMENT. SPECIAL ISSUES INCLUDE THE APPLICATION OF THE NLRB'S IMPASSE DOCTRINE TO BARGAINING OVER ISSUES IN THE REALM OF MANAGEMENT AND POSSIBLE FAILURE TO APPLY THE DOCTRINE WHEN A DEADLOCK HAS BEEN REACHED ON LABOR-RELATED MATTERS. FIVE GUIDELINES, INCLUDING THE PROHIBITION OF STRIKES BY PUBLIC EMPLOYEES, ARE LISTED FOR COLLECTIVE BARGAINING IN THE PUBLIC SECTOR. THIS ADDRESS WAS PRESENTED AT THE PACIFIC NORTHWEST ASSEMBLY CO-SPONSORED BY THE UNIVERSITY OF OREGON AND THE AMERICAN ASSEMBLY OF COLUMBIA UNIVERSITY (UNIVERSITY OF OREGON, EUGENE, JULY 20-23, 1967) AND APPEARS IN "CHALLENGES TO COLLECTIVE BARGAINING," A REPORT OF THAT ASSEMBLY. (JK)