My gut reaction to this is pretty negative.
It feels instinctively wrong to tie prison time to pay - it should be tied to rehabilitation. And asking someone to risk their lives so they can gamble on reduced prison time just seems... I dunno, isn't that the thing that's usually done by villains in the story books? I mean, maybe I'm naive about it, but I have a fairly strong cultural background telling me that using people's desperation to convince them to do terrible jobs is kind of on the evil side?
Is there additional nuance I'm missing? My first thought is: suppose they were payed a real wage, but independently the prison system had a vending machine where you could exchange wages for reduced prison time. I wouldn't be OK with a system like that.
My objection also wouldn't be about the details. It wouldn't be, "Oh, maybe it'll get abused or someone might threaten a prisoner for money." If I was forced to describe why a system like that felt so wrong, I would probably say something like, "Rehabilitation isn't transactional, and a debt to society isn't something that can be repaid with cash."
So this feels like an abstraction to me that doesn't ultimately change anything about the underlying mechanics being kind of messed up.
If that's not the case, if fighting fires is purely a rehabilitation strategy and the reduced sentence isn't a substitute for money -- then shouldn't we be paying them as well as reducing their prison sentence? If we're not treating freedom as equivalent to wages, then why are they being denied wages?