In my experience it is not so much schools who 'label' children as it is their parents.
In all too many cases where a child is doing badly in school - an excuse MUST be found. Dyslexia is a most convenient peg on which to hang this particular hat!
Far too loosely diagnosed, often 'dyslexia' is used to turn the child into a victim which ultimately helps nobody, indeed it will often exacerbate situations.
Justifying failure is always a disaster for the child's development.
If you are dyslexic then you may well start with a disadvantage but this requires effort to overcome and not platitudes.
I may be a touch cynical - (What do you mean that you had spotted that?) - but I also note that certain organisations depend on the diagnosis of dyslexia for their very existence .... This is also the case with a number of other childhood 'conditions' which may well exist but can be exaggerated or again, be too loosely diagnosed.
(My Mum was so over-protective when I was a child, I am certain that if these conditions had been around when I was a nipper - I would have been dragged along to confirm as many as possible!)