After a decade of relative peace, local governments in the Washington area are demanding that public employees accept wage concessions and in some cases layoffs, challenges that organized labor is ill-prepared to meet.

In many cases across the area, unions have been caught off guard by cost-cutting proposals that local officials say are needed to offset mounting deficits.

In the District, there is no indication that labor will do more than threaten to seek arbitration to win a new round of pay raises. In Virginia, a right-to-work state, labor's protests are limited to little more than public relations appeals. Similarly, in the suburbs of Maryland, unions are spending thousands of dollars on radio and television advertising to protest planned cuts.

D.C. Mayor Sharon Pratt Dixon, who was snubbed by the unions during last year's Democratic primary, made a point her first day in office to tell nearly three dozen union leaders representing schools, police, firefighters and government workers that all bets -- and raises -- were off.

Facing a $302 million deficit and buoyed by an overwhelming surge of public support at the polls, Dixon apparently had no reason to placate union demands.

"It's not a happy position I find myself in," Dixon said last week about her refusal to consider pay raises. "It's just a fact that there's not any money . . . . I think, at a personal level, {the unions} realize this is not something of my doing. I'm just trying to deal with it the best I can."

There are indications that public sector unions in the District, such as the American Federation of Government Workers and the American Federation of State, County and Municipal Employees, are beginning to forge a working relationship with Dixon.

But it remains an uncertain alliance, with labor still smarting and clearly irritated from the last six weeks of public flogging.

"The problem is labor has been taken for granted," Marchel Smiley, president of a Service Employees International Union local, a private sector union, and president of the union's joint council, said of the problems in the District.

"Labor is being perceived as politically impotent by the politicians it has helped," Smiley said. "A lot of that is labor's own fault. It has not been unified. The other {problem} is that labor has not been organized and educating its membership why labor support is important."

Public employees, by law, don't have a lot of leverage in labor disputes.

They are prohibited from striking. Many have no right to arbitration to settle disputes with management.

Faced with such restrictions, "we target the public," said Maureen Daniels, president of Fairfax County's largest teachers association. "In our case, we want to heighten people's awareness that these cuts will affect what happens in the classroom. We want them to help us lobby the School Board."

Toward that end, Fairfax County teachers sponsored an $8,000 radio campaign in which teachers and parents talk about why cuts in cost-of-living raises would be unacceptable.

"We can't put our students' academic needs on hold while we get our fiscal house in order," one ad says. "Educating our children must be a priority."

In Prince George's County, where County Executive Parris N. Glendening has asked all county employees to postpone cost-of-living raises, the police union launched a $10,000 ad campaign last week accusing Glendening of "handcuffing" officers with his proposed budget cuts.

Meanwhile, Howard County teachers and government employees, facing no cost-of-living increases, longevity pay or merit raises and possible layoffs, have banded together and hired a financial adviser to review the county budget and suggest other ways to spread its shrinking dollars.

They also have asked for higher taxes, which they say is the county's best hope for providing equitable pay and benefits to local government employees.

Unions in the District and Montgomery and Fairfax counties have made similar appeals in the face of often chilly reactions from local elected officials.

"We keep saying to them that we shouldn't have to bear the brunt of the county's fiscal mismanagement," said Ken Reichard, a Montgomery County union lobbyist. "They created this problem by themselves. Now they want us to pay for it."

Whether labor's public relations efforts and other tactics have any lasting effect may depend on how badly the economic slowdown hurts the Mid-Atlantic region.

Even public officials not directly involved in current labor negotiations observe that unions are asking for more at a time when private businesses and public institutions must cope with less.

"How can public employees expect not to suffer when the private sector is laying people off left and right?" said Maryland state Sen. Laurence Levitan (D-Montgomery).

Montgomery County Executive Neal Potter has warned that unions asking for raises at a time the county faces a $175 million budget shortfall are jeopardizing job security. Potter has asked county workers to give up negotiated cost-of-living increases, although officials say employees probably will receive longevity pay and scheduled salary step increases.

"We're at the last resort," said Gene Lynch, Potter's spokesman.

Local governments are receiving added pressure from governors in Maryland and Virginia, who have told state employees that wage freezes are likely. Several Maryland legislators have threatened to reduce state aid to localities if any local governments do better by their employees.

The friction between labor and government may be felt most keenly in the District, where Dixon assumed office to find that every major union contract had expired in the last six months.

Last month, Dixon presented a deficit-reduction plan that includes no pay increases for union and non-union workers, for a savings of $63 million. Her resolve was matched by members of the D.C. Council, who voted down two negotiated agreements signed by then-Mayor Marion Barry.

Politicians and labor leaders say it will take months to assess the strength of employee organizations in an era of retrenchment. Both sides will be watching whether unions, which frequently are splintered along ideological and factional lines, can reclaim the solidarity that once made them potent political players.

"The unions aren't going to roll over," said James Seawright, president of the American Federation of Government Employees local that represents 600 employess at the District's Department of Employment Services.

"The only benefit of {the city's financial crisis} is that it's united the unions," Seawright said. "Labor's going to be something that Mrs. Dixon is going to have to deal with."