Story highlights

Spanish entrepreneurs are keeping afloat by tapping niche markets.

At 25%, Spain has the highest rate of unemployment in Europe, according to Eurostat

The north-eastern region of Catalonia accounts for a fifth of the Spanish economy

(CNN) —  

Niche markets – such as reusable diapers – are proving the buffer against recession for some Barcelona-based entrepreneurs.

Monste Munoz is the founder of Tucuxi, a small business which specializes in ensuring growing families did not suffer from rising diaper bills. She told CNN’s Richard Quest the company was able to save families significant sums of money.

“We have a key advantage for parents,” she said. “With the first baby where they have to invest in the cloth nappies they already save 900 euros [$1,665].”

Spain: Perils of being ‘filthy stinking poor’

She added: “Another type of customer buys them because of ecological motivations.”

The business is powered by three second-hand sewing machines in a tiny workroom, and Monste ensures that any earnings are reinvested back into the company.

Barcelona is the capital of the north-eastern region of Catalonia, which accounts for a fifth of the Spanish economy and has the highest gross domestic product of all the Spanish provinces.

But Monste says the high labor costs and a lack of bank lending is preventing the expansion of her diaper-based venture, and makes local production uncompetitive.

Spain’s next crisis: Regional splits?

At 25%, Spain has the highest rate of unemployment in Europe, according to Eurostat. And Monste says taxes rather than salaries are responsible for Spain’s jobless problem. “For every 100 euros I pay a person I have to pay 40 to 50 to the state and that is extremely expensive,” she said.

Santa & Cole – another Barcelona-based firm – have turned to foreign markets to boost sales. The company – which specializes in lighting and furniture – has seen exports more than double from 30% since 2006.

Santa & Cole President Javier Nieto Santa says that many of small suppliers in the area have gone out of business due to the economic downturn and this is forcing companies to take more risks in order to survive.

He said: “We are not giving up. Spain has done a lot of things properly in the last 15 years. I strongly believe in our country… We all have to become international.”

CNN’s Oliver Joy contributed to this article