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ATLANTA (Reuters) - A jobs program in the southern state of Georgia, which could feature in President Barack Obama's plan to fight unemployment, needs big fixes and would not work as a federal initiative, says the official who runs it.
The Georgia Work$ program to help the long-term unemployed has gained national attention as a possible model because it costs taxpayers relatively little and has been effective.
Obama was quoted as praising the scheme at a town hall meeting in Illinois last month as "smart" although it remains unclear if it will feature in a major jobs speech he is due to deliver to Congress on Thursday.
Despite the plaudits, Georgia Work$ is being restructured to overcome significant flaws. Even within the state it seen as "not a marquee program," said state Labor Commissioner Mark Butler, the Republican elected official who oversees it.
More than 30,000 people benefited from the program in the past, but in its present form, Georgia Work$ is tiny: only 12 unemployed people signed up in August and 92 have done so since February, according to state Department of Labor statistics.
The voluntary program places unemployed people with firms for eight weeks of job training similar to an internship. Participants receive unemployment insurance plus a small stipend and have the chance of a job at the end of it.
Butler said the program he inherited in January was virtually bankrupt and "fraught with problems," so he is surprised it has attracted so much national attention.
"We think that the foundation (idea) has merit but we don't believe that the program we have right now is as effective as it could be and it needs a lot of tweaking," Butler said.
"It can help certain people in unemployment either gain some additional training or get their foot in the door. Do I think that ... this is going to solve our problems? I don't think it's on that big of a scale, no," he said in an interview on Wednesday.
Butler said it was just one tool to fight unemployment in Georgia which stood at 10.1 percent in July and has exceeded the U.S. average for the past 48 months. Losses in manufacturing, construction and finance have been severe.
Fear that the U.S. economy could slip back into recession is hurting Obama's chances of winning re-election in 2012.
Georgia labor department officials said there had been no contact with the White House over the program.
One advantage of the initiative is that it reduces the risk for employers who want to hire, former Labor Commissioner Mike Thurmond, a Democrat who set up the program in 2003, told Reuters Insider.
Yet employers remain wary. Local business leaders who spoke in Athens, Georgia this week linked their reluctance to hire to concern over future demand in a struggling economy.
They also cited a skills deficit among the unemployed.
Construction equipment maker JCB North America set out last November to fill 200 new skilled manufacturing jobs at its headquarters in Savannah, Georgia.
"We thought it would be a fairly easy task given the high unemployment figures especially here in Georgia but we have had significant difficulties in finding the skilled labor," general marketing manager Karen Guinn said.
Georgia Work$ had been successful but only "at the margins," said Thomas Smith, a finance professor at Emory University's Goizueta business school. He said it needed more rigorous follow-up with employers to maximize its potential -- something that would increase administrative costs.
Labor Commissioner Butler said it would be more help for low-skilled unemployed people than jobless professionals. While other states could use it as a model, he said he doubted federal involvement would prove positive.
"When the federal government gets involved does it ever help?" he said, echoing a view held by many conservative Republicans. "(It would mean) more costs, more regulation."
The program has undergone substantial recent change. Between March 2003 and July 2011, employers accepted some 32,000 participants into training.
Of those, some 24 percent who completed training were hired, officials said, though they acknowledged that the program's statistics need to be improved. There are no figures on long-term job retention and state administrative costs have not been tallied.
In September 2010, the program was opened to any job seeker, the stipend was increased $600 from $240 and its length was reduced to six weeks from eight. Monthly participation jumped to a peak of 4,081 in January this year.
But the changes blew through the annual budget and Butler began an overhaul and reinstated the original conditions in a move that decimated the participation rate.
The program has no dedicated staff and lacks a full-time leader. In a further sign of its low profile, its website is buried within the departmental site and is less prominent than another state training scheme, Georgia Work Ready.
Editing by David Storey