NAIRU refers to the non-accelerating inflation rate of unemployment i.e., the level of unemployment at which there is no cyclical unemployment. Once the NAIRU of an economy is reached, any increases in aggregate demand (such as from increasing government expenditure G) will only place upward pressure on wages as businesses compete to hire existing workers rather than recruit new ones as those individuals lack the skills to make them employable (structural unemployment). Thus, rather than lowering unemployment (as injections usually do), the increase in AD accelerates the rate of inflation through demand pull and cost push factors.
What reducing the NAIRU means is to decrease this level of unemployment. This can be achieved through labour market reforms which seek to increase the skills and training of workers so that there is no longer a mismatch in the skills demanded by employers and those possessed by employees.
