I'm not so sure that slavery or serfdom has continued in Morrowind. The PGE 3rd says:
The first PGE was propaganda, directed at showing all unconquered lands as dangerous places full of evil barbarians.
The third PGE is propaganda, directed at showing how the Empire is all united in its values.
Is Helseth genuinely concerned that slavery is an evil and inefficient system that needed to be brought to an end? Maybe. He was raised in High Rock, after all.
Did the change happen exactly as the PGE says? Hardly likely. House Dres' economy was entirely based on slavery. Not just using them in mines and plantations, but also capturing them and selling them to the other houses. And yet they were with the Hlaalu the earliest adopters of the reform... You can bet there was something unsaid behind all this. Even if all members of House Dres were suddenly convinced that slavery was bad, restructuring all the economy takes time.
So we're being told everything is golden, and we know -- because we are rational beings able to use our brains -- that it's not possible. Therefore, what we're being told is inaccurate, in whole or at least by omission.
Q.E.
Duh.