Metro and the union that represents its 4,800 bus drivers, train operators, station attendants and mechanics are locked in a tight labor struggle, the outcome of which will determine whether deep cuts in bus service will be forced at a time of growing ridership.

The struggle centers on a controversial cost-of-living protection clause that has been in the union contract since early in 1973 -- when Metro inherited four privately owned bus companies along with the protection clause.

Metro wants the clause modified to reduce the number of times a year it must pay cost-of-living increases and to put a lid on the amount of protection the increase will provide. Local 689 of the Amalgamated Transit Union wants to retain the clause.

Nobody is officially predicting a strike April 30, when Metro's contract with Local 689 expires. Strikes against Metro are illegal under federal law, and unresolved issues -- as the cost-of-living question is -- must go to binding arbitration. Metro officially requested arbitration last week, but negotiations continue on some lesser questions.

The cost-of-living issue precipitated a wildcat strike in July 1978 that halted both bus and subway service for eight days and turned downtown Washington into a parking lot.

Inflation protection and similar cost-of-living issues have caused transit strikes in recent months in Chicago, Cleveland, Los Angeles and San Francisco, not to mention the just-concluded strike in New York.

The cost-of-living clause in the Metro-Local 689 contract provides that, four times a year, Metro's workers shall receive a percentage salary increase equal to the percentage of increase in the most recent Consumer Price Index for D.C. area wage earners and clerical employes.

In the last few months, with the CPI running near or at 20 percent, the clause has caused a major overrun in Metro's budget. Metro projected an increase of 13 cents an hour on March 2 of this year, but had to pay a 26-cent increase instead.

Metro's budget called for a local government subsidy this year of $116.4 million. Because of the cost-of-living clause, the unexpected doubling in the price of diesel fuel for buses and extra bus service that was added to meet the surge in ridership, the budget is now $9.8 million out of balance.

That extra cost is passed on to local governments and they are hopping mad about it (although they do not have to actually pay for two years). The bad news about this year's budget overrun comes at a time when Metro is trying to win approval from local governments for a record $276 million budget for the fiscal year that begins July 1.

Alexandria and Arlington and Fairfax counties have all filed resolutions demanding improved management at Metro and calling for big cuts in the proposed subsidy requirement. The two Maryland counties and the District of Columbia are equally concerned, but publicly less vocal, about Metro's rising costs.

Big fare increases June 29 are inevitable and will partially serve to cut the subsidy required.However, if the subsidy cuts Virginia jurisdictions want are to be realized, reductions in bus routes must be made. Little-used late-night and mid-day routes are likely to be the first casualties, but cuts in rush-hour service are also possible. There is even some discussion, not yet widely supported, of reducing weekend subway service.

Reduced bus service means quite simply that there will be fewer jobs for bus drivers, mechanics and others, and that is the message Metro is trying to deliver to the union in negotiating sessions.

In an interview in January, Metro General Manager Richard S. Page said that "the question all our employes are going to have to consider is whether there is going to be any money left to employ them, if we keep this [clause] in . . .

"We are pushing the patience of the local governments, and at some point soon they are going to say, 'No more.'"

In meetings with local officials, including one public session with the Arlington County Board, Page has encouraged them to give him the support needed to carry a strong management position in negotiations.

Charles Boswell, the new president of Local 689, said that Washington "is one of the most expensive places in the world to live anyway, and it's not a question of us being the best-paid drivers in the world." Boswell said the local union ranks seventh nationally. "They," said Boswell, "just want us to fall farther behind than we have in the past."

In January, the most recent date available, the salary for Washington drivers placed them fourth nationally, behind Chicago, Boston and San Francisco.

Boswell concedes that the growing interest in suburban governments in setting up their own bus systems to feed the subway is in part related to the union contract.

Prince George's, Fairfax, Arlington and Alexandria are all pursuing studies on how to run their own bus operations. Montgomery County has a head start on just such a plan with its highly successful nonunionized Ride-On system.

Montgomery County's average Ride-On driver is paid $12,803 per year as compared with Metro's $20,509.

Ride-On, however, has avoided unions through some interesting devices that may not be possible for other jurisdictions. All the buses are purchased completely with local money. If federal aid were used -- and federal aid pays for 80 percent of new bus purchases -- then federally mandated labor protections would apply to the jurisdiction seeking the aid. Ride-On has stayed small enough so far to avoid union organizers, but knowledgeable labor and management sources think that day is coming to an end.