Inside Report (7)

There's some high-level fence-mending going on.

Labor Secretary Donovan is trying to patch relations with labor, which has sharply criticized him. Recently he met with a dozen state labor leaders in Washington. And he now plans to invite top national leaders to meet with him, acknowledging ''an obligation to improve my relations with Lane Kirkland and the others.'' Donovan backs expanded job-training programs and tax credits for hiring jobless youths. He's also taking an important part in the administration's fight to stave off congressional moves for short-term jobs programs.

He's also been credited with helping to kill a White House proposal to tax unemployment benefits.m