The direct cause of WWI was the assassination of Archduke Franz Ferdinand at Sarajevo on 28 June 1914.
Factory owners used child labour because, quite simply, it was cheaper. Children worked for less than adults, and their parents were often happy to send them off to work, as the lower classes did not value education. Many men lost work when machines were introduced, as machines could do more work in less time, so if the children had the opportunity to work and earn money, they did.