diff --git a/include/image.mk b/include/image.mk
index a1308f47ade..da3d500e812 100644
--- a/include/image.mk
+++ b/include/image.mk
@@ -243,8 +243,7 @@ endef
 
 ifeq ($(CONFIG_TARGET_ROOTFS_SECURITY_LABELS),y)
 define Image/mkfs/squashfs
-	echo "LD_LIBRARY_PATH=\$$LD_LIBRARY_PATH:$(STAGING_DIR_HOSTPKG)/lib" \
-	     "$(STAGING_DIR_HOSTPKG)/sbin/setfiles -r" \
+	echo "$(STAGING_DIR_HOSTPKG)/bin/setfiles -r" \
 	     "$(call mkfs_target_dir,$(1))" \
 	     "$(call mkfs_target_dir,$(1))/etc/selinux/targeted/contexts/files/file_contexts " \
 	     "$(call mkfs_target_dir,$(1))" > $@.fakeroot-script
diff --git a/package/utils/policycoreutils/Makefile b/package/utils/policycoreutils/Makefile
index 03b3fd4879f..6b7b78ed785 100644
--- a/package/utils/policycoreutils/Makefile
+++ b/package/utils/policycoreutils/Makefile
@@ -7,7 +7,7 @@ include $(TOPDIR)/rules.mk
 
 PKG_NAME:=policycoreutils
 PKG_VERSION:=3.1
-PKG_RELEASE:=3
+PKG_RELEASE:=4
 
 PKG_SOURCE:=$(PKG_NAME)-$(PKG_VERSION).tar.gz
 PKG_SOURCE_URL:=https://github.com/SELinuxProject/selinux/releases/download/20200710
@@ -67,9 +67,11 @@ MAKE_FLAGS += \
 
 HOST_MAKE_FLAGS += \
 	PAMH=$(CONFIG_BUSYBOX_CONFIG_PAM) \
-	PREFIX=$(STAGING_DIR_HOSTPKG) \
-	SBINDIR=$(STAGING_DIR_HOSTPKG)/sbin \
-	ETCDIR=$(STAGING_DIR_HOSTPKG)/etc
+	DESTDIR=$(STAGING_DIR_HOSTPKG) \
+	PREFIX= \
+	SBINDIR=/bin
+
+HOST_LDFLAGS += -Wl,-rpath=$(STAGING_DIR_HOSTPKG)/lib
 
 $(eval $(foreach a,$(DIR_SBIN),ALTS_$(a):=300:/sbin/$(a):/sbin/policycoreutils-$(a)$(newline)))
 $(eval $(foreach a,$(DIR_USR_BIN),ALTS_$(a):=300:/usr/bin/$(a):/usr/bin/policycoreutils-$(a)$(newline)))