Singapore has come in ninth on the latest United Nations Human Development Index, which uses indicators such as life expectancy and education to gauge a country's level of development.
But it slid 14 spots when the index was adjusted for inequality, with the Republic faring particularly badly when it came to inequality in education and income levels.
By comparison, Hong Kong, which tied Germany for fourth, slid 17 spots after adjusting for inequality. Germany slid seven spots. The United States, which tied Britain for 15th place, slid 13 spots.
Singapore scored 11 per cent for inequality in education, far below the 1.9 per cent from top scorer Switzerland.
The Republic's income inequality also measured in at 25 per cent, compared with Iceland's 11.7 per cent.
The closer to zero a country scores, the closer to perfect equality it has achieved.
The UN Human Development Report, released on Monday, noted that inequality is a global issue that hurts all societies, "weakening social cohesion and people's trust in government, institutions, and each other". It added that a "new generation" of inequality is opening up, centred around topics such as technology and climate change.
"What used to be 'nice-to-haves', like going to university or access to broadband, are increasingly important for success," said Mr Pedro Conceicao, director of the Human Development Report Office at the United Nations Development Programme.
"But left with only the basics, people find the rungs knocked out of their ladder to the future."
Singapore University of Social Sciences associate professor Walter Theseira said Singapore's poor showing on inequality in education is likely to be explained by the fact that older Singaporeans have had very little formal schooling compared with younger ones. "Singapore will be structurally disadvantaged here compared to other countries which have been developed for longer, and have had mandatory schooling implemented much earlier than we did."
Norway topped this year's Human Development Index, followed by Switzerland and Ireland. Germany and Hong Kong tied for fourth place, while Australia and Iceland tied for sixth. The top 10 list was rounded up by Sweden, Singapore and the Netherlands. Singapore also came in ninth last year.
The report also looked at how countries matched up in areas such as gender parity, quality of life and women's empowerment, as well as environmental and socio-economic sustainability. Singapore did well in areas such as economic performance, quality of education, and standard of living.
But the report also revealed several weak spots. For instance, Singapore scored among the bottom third of all countries for its fossil-fuel energy consumption.
On Singapore's index score for income inequality, Singapore University of Social Sciences associate professor Walter Theseira said: "I think we know this is a perennial issue - that income inequality can be substantial in Singapore."
But he also pointed out that income inequality is not completely correlated with quality of life or other human development indicators. "While it is true that the developed European countries generally have lower income inequality than Singapore, there are also plenty of places with low income inequality which are very poorly developed and which we would not want to change places with," he said.
He added that one dimension of income inequality often seen in cities, such as New York and London, is the divide between the global elite and the city's ordinary residents. This exists in Singapore as well and a comparison would be useful, he said.
Dr Theseira also said Singapore's poor showing on inequality in education is likely to be explained by the fact that older Singaporeans have had very little formal schooling compared with younger ones.
"Singapore will be structurally disadvantaged here compared to other countries which have been developed for longer, and have had mandatory schooling implemented much earlier than we did."