I feel this is a worthwhile idea as it would allow the recuperation of losses from aggrieved parties and help cost the state far less in prison and court costs. it would also allow those who wanted back into society the chance to work harder and show their commitment to reform, and allowing them a shorter sentence while keep those unwanting to do work or reform as quickly from being released as early and still cost the state less.
For crimes like theft, fraud, arson and woeful damage of property, instead of a mandatory period of time spent in prison for this, which costs the state a large sum per prisoner, introduce a system of "work hours" that pay out at minimum wage+ depending on the work. Convicts should have to pay back (e.g. 3 times, which would include court expenses) the cost of the damage done or items stolen.
When on this system, they should get adequate food, bedding and exercise to live a healthy lifestyle, but any commodities beyond this should be charged for as extras. e.g., if they want a better quality of food, it will increase the amount of hours needing "worked" before their release.
Jobs available could include simple things like food production, basic product assembly, maintenance of public works, e.g. roads. At a further extreme, a hand crank or similar that when turned that would produce electricity to run hospitals, schools and other public buildings, also helping keep electricity costs stabilised and promoting a greener economy.