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The proposal would see offenders given £5.80 per hour, the minimum wage, of which they would keep around £20 a week.
Though convicts who work currently receive a maximum wage of £9.60 a week whilst behind bars, the idea is that the rest of the money they make would go to inmates' families, victim support groups and the prison service itself.
Another idea is to pay some of the prisoners' wages into a pot, which those who go straight for two years would be allowed access to.
But the scheme means building prisons around existing factories to make the business of transporting prisoners to and from work safer and easier.
Shoe repairs, recycling and data input are the kinds of jobs that are expected to be offered.
Mr Clarke wants to put an end to prisons as places of "institutional idleness" and so, in a bid to encourage inmates to work, those who do not wish to work full time may lose some of their perks.
The Justice Secretary believes that full-time employment behind bars will mean convicts are more likely to head for gainful employment once they are released.
"We have to try to get those people who have the backbone to go straight. To handle a life without crime when they have finished their punishment," the Daily Mail claims he will say.
There are a few issues with this new proposal though - should all 85,000 of the country's prisoners work 40 hours a week, the total income would be in the region of £1 billion.
And the problems of employment rights and a possible union would no doubt rear their heads before long.
What do you think? A sound idea or a disaster waiting to happen? Leave your comments below.