In 3.11 the labels plugin changed so that manipulating labels required the "Edit Issue" permission. This drastically impacted our organizations workflow, as we'd just introduced labels in our previous upgrade, and we don't give "edit issues" to all users, but we do want all authenticated users to be able to manipulate lables.
As a compromise from LBL-73 we suggest adding an "Edit Labels" permission, similar to the attachments/comments permission scheme. This would allow customers to choose between the old label behavior (reported as too permissive in LBL-73) and the new label behavior (too restrictive for our use).
We've also opened support JSP-19701 originally listing this as a bug/support case.