If you create a label and then use the indent icons (right/left arrow) on course page, it does not indent.
(Also, it looks a bit bad in the first place because when you create a label using the html editor, the icons go on the next line - even if it is only a one-line label text. I think this is because the html editor forces everything into a paragraph, but it kind of sucks. Mentioning this because may be related to potential fix, although also, may not be!)
Making this a blocker because petr said so ('I borked it in 1.9.x recently and then reverted because people were screaming too much')