The men parked their taxis near the palace of de facto ruler Crown Prince Abd Allah and presented a complaint signed by 1200 drivers upset by a delay in steps to phase out foreign taxi drivers, Al-Riyadh newspaper said on Thursday.
Oil-rich Saudi Arabia has been trying for years to ease its dependence on foreign labour. It had aimed for 100% "Saudisation" of taxi fleets by last week's Islamic New Year.
But Labour Minister Ghazi al-Ghusaibi decided the number of potential Saudi drivers was still too low and set a more modest target of 30% for the time being, the papers said.
The Saudi drivers protested, saying they were losing money because of the competition from foreigners - mainly Pakistanis.
Al-Ghusaibi said earlier this month that the kingdom's foreign labour force stood at about 6 million, out of a total population of 23 million.
Saudis make up 14% of the workforce in Riyadh.
The Saudi Council of Ministers has adopted a number of decisions to intensify the country’s "Saudisation" drive, urging government agencies, universities and media organisations to support measures taken by the government to reduce dependence on foreign labour.
The weekly cabinet meeting held on Wednesday and led by Crown Prince Abd Allah at Al-Yamamah Palace in Riyadh instructed the labour and civil service ministries to activate all resolutions, orders and circulars related to "Saudisation" and ensure they are properly implemented.
Al-Ghusaibi supports employing
more Saudis in the workplace
The cabinet said companies that fail to comply with regulations to promote the hiring of Saudis will not be awarded government contracts.
"All relevant government agencies, universities and media organisations must support the measures taken by the Labour Ministry to cut the number of labour visas, train Saudis and activate the private sector’s role in the employment of Saudis," Culture and Information Minister Iyad Madani said.
Yesterday’s cabinet decision comes in light of recommendations made by a team of experts entrusted with tackling unemployment in the country.
Last year Human Rights Watch released a report on the exploitation and abuse of immigrant workers in the Kingdom.
The rights group said its report documented serious and systematic violations of the rights of some of the millions of foreigners working in Saudi Arabia.
But al-Ghusaibi said the report was "unbalanced" and "exaggerated".