The objective of the study was to determine the factors influencing labour demand in Uganda for the period 1987 through 2020by specifically determining the long run determinants of Labor demand, investigating the short run determinants of Labor demand as well as finding out the causal effect of the determinants on Labor demand in Uganda by using the data from World Bank. Johansen’s Cointegration Procedure was used to test for the existence of a long run relationship among the variables and found out that there exists at most 3 cointegrating relationships. The Vector Error Correction modelwas employed to determine the short run and long run determinants of labor demand and found out that final consumption expenditure, GDP and capital formation have statistically significant and positive relationships with Labor demand in the short-run at 5% level of significance. The VECM results also reveal that final consumption expenditure, GDP and capital formation have statistically significant and negative relationships with Labor demand in the long-run at 5% level of significance. Granger Causality test was used to find out the causal effect of the macroeconomic indicators (Gross Domestic Product, Capital Formation and Final Consumption expenditure) on Labor demand in Uganda and found out that capital formation, GDP and consumption expenditure do not granger cause Labor demand. The study recommended that the government should support agriculturalists to undertake modernization in agriculture, BoU should adopt efficient inflation-adjusting and reducing strategies so as to keep the inflation rate at mild level, aim at investing in the human capital and health and should encourage the establishment of the import substitution industries in Uganda.

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