Merging labels is also possible, albeit using renaming feature. For example, if you have three labels named backend, back-end and Backend and want to keep only the last one i.e Backend, you can rename the first two labels to Backend. This way, those labels will be merged.
Field 'labels' cannot be set. It is not on the appropriate screen, or unknown.
When editing label name, you might get the above error. This happens when label is not in Create or Edit Screen. You can add label to those screen, and it should work as expected.
You can find screens from Project settings → Screens.