Labor representatives within the Organization of American States declared here Friday that the OSA has failed to serve the workers interests. With the AFL-CIO in accord they took first steps toward setting up an autonomous regional body.

Pointing out that OAS outlays for programs benefitting trade unions comprise less than 1 per cent of the organization's $85 million budget - and that further cutbacks are now being made - the labor leaders declared that "the time has come to reevaluate the desirability of continuing" in the OAS setup.

The trade unionsts' frustration with the OAS comes at a time of difficulties generally for organized labor in the hemisphere. Presiding over the two-day meeting here was Agretine Ramon Elorza, whose General confederation of Labor is now under military control. Elorza is living in Uruguay.

Elected to replace Elorza as head of the OAS unit was the president of the Colombian Workers' Union, Tulio E. Cuevas, who had to leave Wednesday to lead a general strike in Bogota, Columbia, he said, "is a dictatorship with a mask of democracy."

The OAS unit is known formally as the executive committee of the Trade Union Technical Advisory Council. Its recommendations will go to a meeting next month in Peru of OAS labor ministers. The council came about, Elorza explained, because at OAS gatherings the unionists "always came as advisers but they couldn't speak without permission of delegation chief - who was named by the government."

Sinc emsot Latin American governments today have split with organized labor, the advisory council was looked upon as a means of expression that otherwise would be blocked.

"Nevertheless, the reality that we have encountered in Washington is totally opposed to what we had hoped for," he said, referring to cutbacks in labor's share of the OAS budget.

AFL-CIO inter-American representative Andrew C. McLellan, a member of the OAS advisory unit, supported the recommendations that could result in setting up an autonomous labor organization. It would be patterned on the Inter-American Development Bank and the Pan American Health Organization, both of which are outside the umbrella of the OAS.

The role of the AFL-CIO in Latin America has been controversial for decades, with offshoots of the organization having served as funnels for CIA funds. The eight other labor federations represented at the meeting this week are all linked to the AFL-CIO through its regional affiliate.

The OAS unit supported the AFL-CIO position of opposing the current activities of the International Labor Organization, saying that in recent years it has "been drawn into questionable political concerns . . . reducing its activities in Latin America."