The 2013 report, which reviews a country's performance in health, education and income, places Canada in 11th place versus 10th last year.
A closer look at the trends shows Canada actually did better than last year, but other countries such as Japan and Australia improved at a greater rate.
Alyson Queen, a spokeswoman for Human Resources Minister Diane Finley, did not comment directly on the results, but emphasized the government's track record.
"We believe that the best way to fight poverty is to get Canadians working," said Queen. "Our Economic Action Plan is doing just that by helping grow the economy and creating nearly 950,000 jobs since July 2009...Since 2006, there are 225,000 less children in poverty than under the previous Liberal government."
When the index numbers are adjusted for gender inequality, Canada slumps to 18th place. The United States fares even worse — sinking from third to 42nd place.
"I think it's really sad to see that we've dropped so far under the Conservatives," said deputy NDP leader Megan Leslie.
"And I think it reinforces what the NDP has been saying, but also what organizations like the Conference Board of Canada have been saying, about the fact that there's a growing income inequality gap in Canada.
"That gap creates serious problems, and I don't think the Conservatives have been taking it seriously."
The main finding of the report, entitled "The Rise of the South," is a positive one on a global scale. It says that countries that had previously struggled with poverty and inequality are now on a steady developmental climb.
It says Brazil, China and India's combined gross domestic product is now about equal to the combined GDP of Canada, France, Germany, Italy, the United Kingdom and the United States.
"When dozens of countries and billions of people move up the development ladder, as they are doing today, it has a direct impact on wealth creation and broader human progress in all countries and regions of the world," says the report.
Even the countries at the bottom of the development list, Niger and the Democratic Republic of Congo, are among those who showed the greatest improvement.
The UN Development Program credits three factors for the developmental gains. It says southern nations are being proactive and pragmatic in developing policies for their private and public sectors. The countries are also tapping into global markets, and investing in social programs.
Maurice Kugler, head of research and analysis for the UN Development Program's report, said the gains in human development do not signify an end to inequalities in these countries. The gap between the rich and poor is stubbornly resilient — Kugler says only in Latin America has it shrunk.
"If inequality persists, that engenders social and political instability, and it's very important to address this issue of inequality to be able to have sustainable human development in the future," said Kugler.
The report goes on to suggest that multilateral, international organizations should be reformed to include better representation from the southern hemisphere.
"If they are to survive, international institutions need to be more representative, transparent and accountable," said the report.
"Indeed, some intergovernmental processes would be invigorated by greater participation from the South, which can bring substantial financial, technological and human resources."Suggest a correction