Agricultural labourers are undergoing a socio-economic transition due to the intensified capitalisation of agriculture. The change in structure of rural employment in Punjab, over a period, has two prominent facets: shift of agricultural labour to non-farm sector, and conversion of permanent/attached labour in agriculture to casual labour. This longitudinal study, in 1987–88 and 2018–19, presents the transition in agricultural labour households in the state. While the agricultural labour households, solely depending on meagre income from the agricultural sector are struggling, the ones shifting to the non-farm sector are switching over to menial jobs. Rural agro-industrialisation for overall improvement in the employment situation along with enhanced wages, liberal institutional credit and debt waiver specific to workers are vital aspects that need attention.