Explanation: The first definition of full employment would be the situation where everyone willing to work at the going wage rate is able to get a job.
This would imply that unemployment is zero because if you are not willing to work then you should not be counted as unemployed. To be classified as unemployed you would need to be actively seeking work. This does not mean everyone of working age is in employment. Some adults may leave the labour force, for example, women looking after children.
If you define full employment as the absence of demand deficient unemployment, then this natural rate will vary over time due to changes in structural unemployment. For example, in the 1980s, the UK had an economic boom, but unemployment only fell to 7% due to structural and geographical unemployment. But, in the 2010s, more flexible labour markets have seen a fall in this natural rate of unemployment.
In 2013, the MPC introduced forward guidance, saying they were unlikely to raise interest rates, whilst unemployment was above 7%. This suggests that the MPC felt any unemployment of 7% or more would not cause any demand-pull inflation. However, by 2017, unemployment has fallen to 4.5% without any inflationary pressure.
But, in practice, we never see 0% unemployment, and this can make full employment hard to define. Generally, an unemployment rate of 3% or less would be considered to be full employment.
In 2013, the MPC introduced forward guidance, saying they were unlikely to raise interest rates, whilst unemployment was above 7%. This suggests that the MPC felt any unemployment of 7% or more would not cause any demand-pull inflation. However, by 2017, unemployment has fallen to 4.5% without any inflationary pressure.
Hope that helps :)