Although I haven't received any replies yet, I have solved this issue to the extent of fixing the issue.

Solution that worked for me..
I created a 'view' in the database that concatenates the static text to the data itself and connected the merge file to the view instead of the table. I then used these fields as my merge fields and all fields are now dynamic in the merge file. After filtering, I now do not have any labels that are generated with static text if no record exist for that label.

Cheers.. hope this helps someone else.