Little Dorrit is set in early Victorian England, roughly twenty years after the New Poor Law or Poor Law Amendment Act of 1834. The act was intended to reduce the cost of relief (aid) given to the poor. Outdoor relief was abandoned; only indoor relief was allowed, which meant that people who could not support themselves financially were expected to go to a workhouse. Early Victorian workhouses looked very much like prisons; some people even called them "prisons for the poor".
Anyone living in a workhouse would be worse off than people who could support themselves, such as the "manufacturers" from the quote from Chapter 12. For this reason, Mr. Plornish is probably not thinking of manufacturers, because then he would be stating only a truism. What he appears to be thinking of are people who are actually in prison because they are "malefactors", i.e. criminals or felons, and he seems to think that old people in a workhouse are treated even worse than prisoners.
In 1850, a few years before the publication of Little Dorrit, Dickens had published an article entitled "Pet Prisoners", which contained a comparison of the conditions in Pentonville Prison and a workhouse. This prison kept prisoners in solitary confinement ("separate system"), which could have a negative impact on mental health (see for example Michael Ignatieff's account of Pentonville cited on Justice behind the Walls). Dickens wrote:
In the prison, every man receives twenty-eight ounces of meat weekly. In the workhouse, every able-bodied adult receives eighteen. In the prison, every man receives one hundred and forty ounces of bread weekly. In the workhouse, every able-bodied adult receives ninety-six. (…) His lodging is very inferior to the prisoner's, (…)