well but you are also forgetting something... just because the country is old fashioned doesn't change the fact that its child labor. it doesn't matter what they are working for. Children in india are also working for their own sustenance. Same goes for children in afrika, get this they sometimes even help sustaining their sick mother, wow. And they also live in an undeveloped country with different laws and common views.
Just cus its allowed and socially accepted doesn't make it any less child labor. Slavery was also slavery even when it was allowed and socially accepted by society.
The fact that she isn't making money from them is also not really something that matters. These children take care of her property, develop her land and in exchange they get food. Thats labor, if she profits from it or not does not matter.
Also the demonfolk is currently uknown by the public. Like they don't know that they exist. The reason why they are in a bad state is because they need to hide themself, which they need to do cus people might see them as devils. The story made a bad explanation bout it but no they are technically not a stigmatized race, which is also the reason why MC is able to introduce them so easily to the human kingdom.