In January 2020, the Minister of Labor and Social Development, Ahmed bin Sulaiman Al Rajhi, made an important decision that affected many private employers in Saudi Arabia. The directive was to cancel the yellow category of the Nitaqat system entirely. All establishments that were previously classified as yellow would be automatically moved to the red category.
This change took effect from January 27, 2020 onwards.
What Is the Nitaqat System?
Background and Purpose
The Nitaqat program was introduced in 2011 by the Ministry of Labor and Social Development. The word “Nitaqat” means “bands” or “levels” in Arabic.
The program was created to increase Saudization — meaning to encourage private companies to hire more Saudi nationals. By classifying companies into different categories, the ministry aimed to motivate employers to hire Saudis and reduce dependency on foreign workers.
The Four Original Categories
Under the Nitaqat system, private firms were classified into four categories based on their Saudization percentage:
- Premium (Platinum): The highest level — companies with the best Saudization rates
- Green: Companies meeting good Saudization targets
- Yellow: Companies in the middle range, below green standards
- Red: Companies with low Saudization rates
Each category had different benefits and restrictions. Premium and green category companies enjoyed easier hiring of foreign workers. Yellow and red category companies faced stricter rules and limitations.
Why Was the Yellow Category Cancelled?
The Government’s Reasoning
According to the Ministry of Labor, the cancellation of the yellow category was intended to push companies to improve faster. By removing the middle ground, the government wanted to encourage yellow-level establishments to move up to the green category or higher.
In other words, there was no longer a comfortable “middle position” where companies could stay. They had to either improve their Saudization efforts or face the restrictions that come with the red category.
Benefits for Saudi Job Seekers
The move directly aimed to provide more job opportunities to Saudi nationals. Companies that want to stay competitive and avoid red-category restrictions must hire more Saudis. This creates pressure on employers to recruit and train Saudi workers.
What Happened to Yellow Category Companies?
Automatic Reclassification to Red
All establishments that were in the yellow category before January 27, 2020, were automatically moved to the red category. This was not a choice — it was automatic.
Companies did not need to apply or take any action. The system automatically updated their classification once the deadline passed.
What This Means for Red Category Employers
Companies in the red category face stricter hiring regulations:
- Limited ability to recruit new foreign workers
- Possible restrictions on renewing or sponsoring expatriate employees
- Pressure to hire more Saudi nationals to improve their Nitaqat ranking
- May face penalties if they do not meet Saudization targets
Red-category companies must work harder to improve their Saudization percentage if they want to move to yellow (though yellow is now gone), green, or premium status.
Also Read: How to Check Your Company’s Nitaqat Color Status
What to Do If Your Company Is Red
If your employer is in the red category, it does not automatically mean your job is at risk. However, it does mean your company is under pressure to improve Saudization.
Your company may:
- Hire more Saudi nationals in the coming months
- Face restrictions when sponsoring new foreign workers
- Work with the Ministry to create a Saudization plan
As an expatriate employee, continue to perform well and maintain good standing with your employer. Keep your Iqama and labor documents up to date.
Important Changes Since 2020
Nitaqat System Evolution
The Saudi labor system has evolved since the yellow category was cancelled in 2020. The Ministry has continued to adjust Saudization policies and requirements.
Nitaqat classifications may have changed or been updated in recent years. Always check the latest information on Qiwa or through the Ministry of Human Resources and Social Development.
Saudization targets can vary by industry and company size, so the rules are not the same for every employer.
Key Takeaways
- The yellow category of Nitaqat was cancelled effective January 27, 2020
- All yellow-category companies were moved to the red category
- This was done to push employers to improve Saudization quickly
- Red-category companies face stricter hiring limits for foreign workers
- Check your company’s status on Qiwa.sa
- Saudization policies continue to evolve, so verify current rules on official portals