We demonstrate an SCM optical label switching scheme with spectral efficiency of 0.4bit/s/Hz and a spectral density figure of merit of 1. We then employ this scheme in a WDM transmitter subsystem and we investigate the detrimental effects that switching events in tunable lasers can have on such systems. The label performance is shown to hit an error floor when the tunable laser switches channels and this would cause incorrect routing of packets. The bit error rate is time resolved in order to better understand the problem and some possible solutions are discussed.