THE CHRYSLER Corporation wants the government and the United Auto Workers to bail it out. But how is the public to be sure the company will not continue to build gas guzzlers that nobody will buy?

If the Treasury is to guarantee the loans needed to keep Chrysler afloat, then the government should have representatives on the company board of directors. If auto workers are to hold the line on wage increases, then they also should have representatives on the board to protect their interests. And if the company is to have higher productivity and better management in the future, then Chrysler's workers should have the opportunity to participate in ownership and management of the company.

To ensure reform at Chrysler, the government could require that the loans it guarantees be used to set up a trust for employe stock ownership. This would give Chrysler workers a future say in management and greater incentive to boost lagging productivity and to reduce absenteeism, problems that plague the auto industry.

Such a plan would look something like this:

Chrysler sets up a trust that uses government guarantees to borrow money from private banks. The trust gives the money to the company in return for an equivalent amount of common stock. Every year Chrysler gives part of its profits to the employe trust, which sends the profits on to the bank to repay its loan. As the loan is repaid, the trust allocates stock to company employes. Workers could sell their stock, but only back to the trust, so that shares would remain in the hands of employes.

For Chrysler, an employe stock ownership loan is cheaper than raising money on the open market, because corporate profits used to repay such a loan are tax-deductible. Since the company is in the 50 percent tax bracket, it would normally need to have profits of about $2 billion to pay back a $1 billion loan. Channeling the loan through an employe stock ownership trust enables Chrysler to raise the new capital it needs virtually for free. The price it pays is allowing workers to have some say in management and ownership.

Chrysler would not be the only major company with partial employe ownership. Such prominent corporations as Mobil, Weyerhaeuser and Atlantic Richfield have employe stock ownership programs, although without government or worker representatives on their boards. In fact, the Employe Stock Ownership Council estimates that there are 3,000 employe ownship programs throughout the country.

Even the idea of tying government assistance to employe ownership is not new. In 1975, for instance, the Economic Development Administration of the Commerce Department lent $5 million to a trust set up to save South Bend Lathe in Indiana, one of the nation's leading machine-tool producers. The company is now prospering, thanks in part to higher worker productivity, better quality work and fewer worker grievances, according to a University of Michigan Institute of Social Research study.

As the Chrysler loan is paid and wages unfrozen, government and union representation on the board of directors could be phased out, to be replaced by directors elected by the new employe-owners.

Labor representation in the corporate board room, even without the prerequisite of stock ownership, is commonplace in other industrial countries. Labor holds half the seats on the supervisory boards of nearly 700 West German firms, encompassing more than 5.6 million workers. The European Community will soon require any company wishing to incorporate as a European rather than as a nationally chartered organization to place workers on its board.

While the idea may sound a bit radical for a large American corporation, worker participation may be an issue on which the public is ahead of its politicians and social activists. A 1975 Peter Hart poll found, for instance, that two-thirds of those questioned would prefer to work for a company in which employes owned stock and appointed company management, and that half thought such an arrangement would improve the economic condition of the country.

There is no way to know for certain if government and labor participation in Chrysler's management can turn around an admittedly sick company. But the time may have come when having labor and management on opposite sides of the table, with government standing aside as a referee, is a luxury we cannot afford. It is interesting to note that the economists used by the labor representatives on Volkswagen's board were better at predicting car market trends in the early seventies than the company's own analysts. In addition, studies by Michigan's Institute of Social Research show that the more equity workers own in a company, the greater the profitability of the firm. And since auto industry productivity increased a dismal 0.2 percent between 1977 and 1978, giving workers a greater stake in the company and a say in management could give a badly needed boost to productivity.

An employe stock ownership loan, partial worker ownership and public and labor representation on the board of directors are not the sole answers to Chrysler's problems. The die may already be cast due to past mismanagement and the economic downturn. But the Carter administration seems intent on a bailout and there will be heavy pressure on Congress to follow suit. It is likely that the UAW will have to make contract concessions to demonstrate a willingness to do its fair share to save jobs. If so, the best way to protect public and workers' interests while reviving Chrysler is to give both groups some management responsibility. The company's track record suggests the Chrysler management needs all the help it can get.